Luxury retailers are optimistic: Even like lockdowns in china have shaken the growth opportunities of brands, companies of LVMH Moet Hennessy Louis Vuitton for Canada Goose for Ermenegildo Zegna Group report higher incomes and optimistic prospects for the future.
- LVMH revenue increased by 29% in the first quarterwith double-digit growth in all sectors except wines and spirits.
- The Ermenegildo Zegna Group saw its revenues increase by 27% year-over-year in the first quarter, and expects overall growth this year to be in the 1930s, according to its earnings statement.
- Brands are also not worried about a possible economic slowdown: “I don’t believe in a recession in America,” said Gildo ZegnaGroup CEO Ermenegildo Zegna, “or if there is, I don’t believe our customers will be affected by the recession.”
On the other hand: Of course, luxury brands’ faith in the market could easily be misplaced, as netflixit is rapid reversal of fortune demonstrates.
- While the top 20% of consumers typically account for around 70% of luxury retailer sales, Karla Martingeneral manager at Deloittetold Business of Fashion, it’s the behavior of the remaining 80% that determines whether a brand stagnates or continues to grow.
- With this latest cohort increasingly squeezed by price increases elsewhere, their ability – or desire – to buy luxury items could be significantly reduced, particularly if they decide to increase their spending elsewhere. areas such as travel.
- Rising coronavirus infections could also dampen spending: Confidence among affluent consumers declines when COVID-19 cases rise, Best said, citing Visa data.
The big takeaway: The strong demand for luxury items shows that many consumers are still spending and not looking for bargains. This bodes well for luxury brands hoping that growth in the United States will offset continued losses from lockdowns in China.
- At the same time, luxury retailers are not immune to certain headwinds, such as rising supply chain costs, the spread of new variants of COVID-19, and consumer prioritization of property experiments, all of which could impact growth for the rest of the year.
