The world had never seen so much marketing as in the summer. Not only athletes appeared at the Olympic Games, but also the richest European. The Olympic torches and medal cases came from Louis Vuitton, the medals were forged by the jeweler Chaumet, Dior provided the clothes for stars like Céline Dion and Lady Gaga, and Berluti dressed the 1,500 French athletes, sizes 3XS to 6XL. They were the games of Bernard Arnault. Because all of these brands belong to his group LVMH, the largest luxury conglomerate in the world.
All the pomp fit discreetly into the overall atmosphere, because not even brands whose coats cost 4,800 euros want to be considered ostentatious. For stock market professionals, the big appearance was a strange spectacle. Luxury stocks have been under pressure since the spring. The LVMH share fell by more than 20 percent because sales stagnated and business in China weakened. Competitor Kering was no better off, and Hermès and Boss also lost double digits. The British classic Burberry, long a favorite of fashion and stock market fans, even had to endure a price drop of two-thirds within five years – although structural reasons such as Brexit probably also played a role in this case.
The LVMH appearance at the Olympics apparently had consequences. The prices of many luxury stocks have recovered somewhat since the summer. The strategy of taking over large public places and events seemed to be working. This means that the luxury industry does not seem like an isolated caste, but rather like a semi-official body. The richest family in France – one of ours. The Arnaults are simply part of public life, with a museum in the Bois de Boulogne, numerous boutiques on the Place Vendôme, fashion shows in the Louvre and dozens of shopping addresses on the Champs-Élysées.
Louis Vuitton designed the case for the Olympic torch.AFP
But will the bear market really turn into a bull market again? The luxury spell has lost much of its magical power. When it was revealed in the spring that a bag from a Parisian luxury brand cost less than 60 euros to make in Italy, but sells in stores for more than 2,500 euros, it was no longer a surprise. Some people online were even surprised that the brand paid so much for the leather and production. Many customers have now realized that the profit margins, especially on leather goods, are astronomical.
Youtubers and Tiktokers are now also creating awareness that you don’t pay for the value of the craft, but for the value of the brand. They cut up and shred leather handbags and find that material and manufacturing costs are often just ten percent of the sales price. No wonder, because a lot of the income has to flow into marketing – so that the good piece is considered valuable.
There are no exclusives for many
The question now is whether the symbolic value can keep up with the sales prices. The industry’s strategy of bringing expensive goods to many people is slowly leading to a self-contradiction: there are no exclusives for many people. Just as an haute couture dress is only sold once in a country or region, so that two women don’t come across each other in the same Chanel dress at the opera in New York or at a party in Doha – that’s actually how artificial scarcity should be Fuel desire by driving up prices. But the opposite is the case: brands are flooding the market with more and more products.
Until the opium loses its effect for the people. The belief in the beautiful appearance is already crumbling. The oversupply is met with increasing skepticism. This is not just about pandemic and inflation shocks, subdued income expectations, crises and wars and geopolitical risks such as the China-Taiwan conflict. What will also dampen consumer enthusiasm in the future: New generations are looking for experiences rather than status symbols. The trend towards “stealth wealth”, towards inconspicuous wealth with discreet, logo-free self-portrayal, almost seems like a guilty conscience among older people. In any case, hardly anyone wants to peddle their addiction to luxury anymore.
A look into the wardrobe is not deceptive: in view of the overabundance, the only thing that helps is the old motto “Less is more”. Secondary recycling is increasingly taking place via resale platforms and vintage shops – which used to struggle with an outdated image, but now offer a lot of goods and increasingly better quality. The biggest surprise of all the new second-hand platforms on the internet: you can actually still afford the big brands there. And with these luxury products, the material is almost worth more than the marketing.
