Cognitive Market Research’s Post

As we work with our luxury clients to refine their 2025 strategies, we’ve enjoyed diving into the latest insights from The Business of Fashion - Luxury Report. Here are our key highlights on the evolving luxury landscape: Industry Growth 📈 5% CAGR (2019-2023): Exceptional demand for personal luxury goods, led by fashion, handbags, watches, and jewellery. 📈 2.6x Profit Growth: Industry profits nearly tripled between 2019 and 2024, with LVMH, Hermès, and Kering dominating. 📈 Marketing Budgets Up: A 1.5% increase signals a shift to always-on, digital-first activations beyond traditional cycles. The Digital Shift 📲 80% of luxury sales are digitally influenced, making omnichannel strategies essential for success. 📲 Faster trend cycles: Social media has shortened trend lifespans to just 2-4 months, driving constant demand for innovation. Looking Ahead 💡 +2-4% market growth (2025-2027): Recovery is anticipated, with the US as a key growth engine. 💡 Emerging markets: India, the Middle East, and APAC show promise, though they won’t fully offset slower growth in core markets like China and Europe. Challenges & Opportunities 🤝 Evolving audiences: Younger consumers expect innovation, while loyal clients value continuity. 🤝 Luxury redefined: Experiences now take priority over products, pushing brands to deliver exclusivity, craftsmanship, and creativity. We're here to support luxury brands in navigating this transformation, identifying opportunities, adapting to shifting expectations, and creating strategies that truly resonate with UHNW audiences. Reach out and say hello@luux-media.com #LuxuryMarketing #DigitalStrategy #LUUXMedia

Some really great insights here from Aurelien Rigart. In particular, LVMH is noting a shift from "normalization" over the second half of 2023, to a future focus of “STIMULATING PEOPLE’S DESIRES”. This is a focus that is incredibly relevant across categories from luxury to CPG: going beyond “just selling products” to “boost(ing) their customer lifetime value (LTV).” Key takeaway: brand resonance, customer community, and emotional connection are essential in continuing to grow LTV and revenue, for DTC and omnichannel brands alike.

In a surprising shift, luxury brands like Burberry and Yves Saint Laurent are cutting prices to win back middle-class shoppers. 👜✨ Once considered a taboo move, this strategy acknowledges the crucial role of aspirational consumers, who make up more than half of global luxury purchases. With economic pressures in key markets like China and the U.S., these brands are aiming to balance accessibility and exclusivity. How can luxury brands continue to attract middle-class shoppers while maintaining their elite appeal? Share your thoughts below! 👇 #Luxury #Fashion #Burberry #YSL #MiddleClass #AspirationalShoppers #EconomicTrends #Retail #FashionIndustry #BrandStrategy https://lnkd.in/e7_uFmYj

📉 The first half of 2024 has been tough for luxury. 💰 According to LadyMax, luxury giants like LVMH and Kering have reported DECLINING SALES in recent quarters, with decreases ranging from single to DOUBLE-DIGIT percentages. This downward trend is also evident among previously high-performing fashion brands.    Particularly in the Asia Pacific region, including CHINA—a key market for many luxury players—the sector has experienced a notable downturn due to sluggish consumer demand and fragmented spending patterns.    Additionally, a weaker yuan and low inflation could potentially hike luxury item prices, dampening middle-class spending, as noted by Retail Asia    🌍 The early France election announcement also caused a $260 billion drop in the French stock market, which hurt the share prices of luxury brands.     💎 Despite the overall market slowdown, Richemont’s high-end JEWELRY division, including Cartier and Van Cleef & Arpels, has shown robust performance. The stability in this sector highlights GROWTH OPPORTUNITIES for brands with strong high-net-worth clientele and a focus on luxury craftsmanship (see my recent LinkedIn post on How to Target the TOP 1%).    However, with the dampening market conditions, even the winners may be TREADING ON THIN ICE. So, what’s the way out? 🌟 LVMH has stated that the business had entered a phase of "normalization" over the second half of 2023. Their future will focus on “STIMULATING PEOPLE’S DESIRES”. It’s crucial for luxury brands to go beyond just selling products; they need to boost their customer lifetime value (LTV). 💡 Luxury brands can capitalize on digital tools and technologies to optimize CUSTOMER DATA ULITIZATION and enhance CRM through personalized marketing, clienteling, customer service, eCommerce... to maintain positioning and drive SUSTAINED REVENUE and ENGAGEMENT. The key is making the RIGHT investments that yield proportional benefits. What do you think about the current winter in luxury?    Thank you, Kang Bohan, for this insightful news on LADYMAX #China #LuxuryMarket #CRM #Clienteling Image source: (1) Wendy Wei on Pexels 

📉 The first half of 2024 has been challenging for luxury brands like LVMH and Kering, with sales declining by single to double digits. The Asia Pacific region, especially China, is seeing sluggish demand. A weaker yuan and low inflation could further dampen spending. Despite the market downturn, Richemont’s high-end jewelry brands show growth opportunities. LVMH is focusing on “stimulating desires” and enhancing customer lifetime value through personalized marketing and CRM. What do you think about the current state of the luxury market? 🌟💎💡

The #luxury resale market is experiencing significant growth, and while some may view this as resale cannibalizing luxury sales, there's opportunity to leverage this to boost luxury sales again. Three partnership opportunities have risen due to this recent surge: - Capability collaborations provide the technological and operational infrastructure for brands to enter the resale market efficiently through their own channels. - Commercial collaborations focus on enhancing brand presence and authentication in existing resale marketplaces. - Data partnerships could emerge as another frontier of collaboration, where platforms' understanding of pricing, consumer preferences, and inventory patterns could inform brands' strategies across both primary and secondary markets. Read more in Kearney's latest article by Brian Ehrig, Nora Kleinewillinghoefer, and Pauline Mexmain: https://lnkd.in/eim4WUNh

Luxury’s Pricing Reality Check. There is a growing consensus that rampant price #inflation has weakened luxury’s value proposition, contributing to a collapse in demand. And leaders are starting to take action. More accessible #luxury players like Mulberry England, Michael Kors and Burberry have more leeway to address the situation head-on, as their chief executives’ recent comments show. For pure luxury players currently taking a hit — including Kering, LVMH and Richemont — the way forward is less clear. Luxury products are meant to be expensive; that they should feel like a stretch for all but the wealthiest consumers usually goes without saying. But even rich people don’t want to be taken for a ride. And data supports the notion that brands have pushed prices too far, too fast. Over the past 50 years, brands have historically raised prices by 5 to 7 percent annually, already more than twice the rate of inflation. Since the pandemic, most brands raised prices even faster, by a double-digit percentage annually. What can top luxury players do next? Lowering prices isn’t an option (at least not publicly), and brands are loath to bring back end-of-season markdowns that took years to phase out. Even talking about the notion of value-for-money feels antithetical for brands with a top-end positioning. #fashionnews #retailbusiness #businessoffashion #luxuryretail #gucci #burberry #lvmh #luxurygoods #luxuryfashion

The luxury industry braces itself for potential turbulence ahead as Q1 unfolds. Vogue Business offers a peek behind the curtain, providing essential insights into the evolving landscape of high-end fashion. Let's delve deeper with some educational insights: 👥 Consumer Behavior Shifts: Understanding changing consumer behaviors is paramount for luxury brands navigating uncertain times. Analyzing trends in spending habits and preferences can inform strategic decisions. 🛍 E-commerce Acceleration: The pandemic accelerated the shift towards e-commerce in the luxury sector. Brands must continue to prioritize their digital presence and omnichannel strategies to meet evolving consumer expectations. 🌍 Sustainability Imperative: With increasing consumer consciousness, sustainability remains a critical focus area for luxury brands. Integrating sustainability into business practices not only aligns with consumer values but also future-proofs the brand in a rapidly changing market. How can luxury brands adapt to the evolving consumer landscape and economic uncertainties? #LuxuryIndustry #ConsumerTrends #EcommerceEvolution #Fashion #Voguebusiness https://lnkd.in/dNh6DSY8

Recently, the impact of the luxury downturn have been felt across the industry.   LVMH’s fashion and leather goods division reported sales decline of 5% in Q3 of 2024, Ferragamo’s sales dipped by 7.2% while Ermenegildo Zegna Group reported decline of 7.8 per cent. Kering sales fell 16% with its largest brand Gucci’s revenue slumped by 25% to €1.64 billion.   💡 Here is the question that arises: Is slowing demand entirely due to weaker economic conditions or can it be attributed to other factors❓   1) Luxury brands obsession for reaching new audiences- There is a growing dilemma between catering to top clientele or serving masses. Hermès has consistently stood out against its major rivals, LVMH and Kering as it primarily targets the wealthiest luxury consumers with long waiting lists for its most popular handbags, which can sell for tens of thousands of dollars. On the other hand, brands like Gucci and Burberry are struggling due to their massification strategy. 2) Growth of pre-loved market: Rather than buying brand-new products, younger consumers are also increasingly turning to pre-loved clothes selling platforms. The global second-hand luxury market was valued at $34.2 billion in 2023, and is expected to reach $72.3 billion by 2032. It is driven by a number of factors, including sustainability, affordability, and unique pieces. 3) Growing demand for experiential luxury over tangible goods: As per recent report by Bain & Company, more than 3 out of 4 millennials want to spend on experiences rather than possessions. Whether attending a Taylor Swift concert or flying to a new destination to experience a local cultural event, experiences are increasingly taking precedence over luxury goods. 4) Changing taste and preferences: Young consumers seek brands with unique values, cultural relevance and personalization rather than ostentation. They prefer brands that use sustainable materials, support ethical sourcing and implement green production processes.   5) The rise of ‘luxury shame’: This is a trend where people feel embarrassed or ashamed to consume luxuries or display wealth. This is making consumers more selective about how they spend their money and encouraging them to be more low-key. Luxury shame can make it difficult for luxury brands to stay competitive. 🤔 Luxury brands need to rethink their strategies in order to stay relevant in the current scenario. For more such strategic insights on luxury industry connect with us. #luxury #downturn #brand #strategies #luxeanalytics

Excellent analysis by Nick Vinckier, with this the most crucial piece for me. 'The market’s future success will belong to those that move beyond tradition and redefine luxury in ways that resonate with evolving consumer expectations: mainly revolving around digital innovation & experiential retail.' #luxury #ecommerce