admin It has been an interesting third quarter in the realm of luxury fashion. Power dynamics are shifting as global demand for luxury goods is both waning and changing.
The luxury industry is shifting its focus to the ultra-wealthy as the middle class cuts back on spending, said the Washington Post in a comment piece this week. Gucci-owner Kering reported a 13 percent decline in third-quarter sales, with its star brand Gucci seeing a 14 percent dip. Yet brands such as Hermes and Brunello Cucinelli are thriving.
This is attributed to differences in customer bases, with the affluent reducing spending confidence while the wealthy continue to spend, the Washington Post said. Kering, particularly Gucci, previously targeted younger, fashion-forward consumers who are now affected by inflation, prompting a shift toward top-tier buyers, despite short-term challenges. As quiet luxury become more pervasive, brands are adjusting their strategies and product offer to cater to more high net worth individuals (HNWI).
As Kering continues with Gucci’s reinvention, investors have shown skepticism, with shares in the group declining approximately 17 percent this year. Kering must aim for a more traditional luxury image to close the valuation gap with competitors like LVMH.
It will be interesting to see Prada’s results, with the Milanese company posting 21 percent retail sales growth in the first half of 2023.
