Brands in the luxury sector are suffering from a weakness in demand for their items with signs of a weakening economy in China and changing consumer behavior.
Signs of this movement were already seen at the beginning of the year, but have become stronger in recent weeks, following the publication of third quarter results.
“The recent drop in demand for luxury products could, indeed, impact the company’s next results in the sector, and this is already happening”, indicated João Crapina, CNPI analyst at Suno Research.
According to Crapina, the high-end market faces some challenges due to the post-pandemic boom and the recent real estate crisis in China, highlighting the result of Louis Vuitton (LVMH), which .
Although the French company has shown growth in the United States and Europe, Asia — one of its main areas of activity — saw a 16% drop, preventing results from rising, explained the Suno specialist.
Gucci went through the same situation at the beginning of the year, when .
However, there are other factors that influence demand, and consequently the results of high-end niche brands.
“There has been a change in the consumer profile, such as Generation Z and Millennials, who consume and redefine luxury. They are interested in brands that have purposes and that their causes are related to sustainability”, said Mariana Cerone, professor of Omnichannel Retail Strategies at ESPM.
A survey by Bain & Company already estimated a slight slowdown in the sector, justified by a feeling of “luxury shame” among consumers, as younger people have postponed spending on luxury goods due to rising levels of unemployment and future prospects. weakened.
Still, according to Cerone, this type of company depended on physical stores. With the pandemic, brands needed to adapt and reinvent online sales, but they are still in the adaptation process.
The expert states that the sector may continue to slow down, due to a drop in key markets, such as China, in addition to inflationary pressure and exchange rate pressure.
And this scenario not only impacts the balance sheets, but also the net worth of some billionaires who own well-known high-end brands, such as LVMH, L’oreal and Kering, owner of Gucci.
According to Bloomberg’s billionaire index, Frenchman Bernand Arnault, owner of the luxury conglomerate LVMH — which includes brands such as Louis Vuitton, Dior, Sephora and Moët & Chandon — lost US$5 billion, or the equivalent of R$29 .3 billion of its assets in the quarter ended in October this year.
But, last month, .
