The global luxury market has been in decline over the past few years, experiencing one of its most significant downturns since the Great Recession. This decline is primarily attributed to economic uncertainty and evolving consumer behaviour, leading to reduced spending on high-end products. The impact has been particularly noticeable in China, once the leading market for luxury brands.
Luxury Giants Struggle While Some Brands Defy the Trend
Major luxury fashion houses, including some of the most prestigious names in the industry, have reported a slowdown in sales. However, not all brands have been equally affected. While industry giants such as LVMH and Kering have seen revenue declines, others like Prada and Hermés have managed to maintain growth despite market challenges. The disparity in performance among luxury brands suggests a complex and multifaceted trend with no clear-cut solution.
Slow Recovery Projected for the Luxury Sector
A recent industry report forecasts that the global luxury sector will grow at a modest rate of 1-3% from 2024 to 2027. This projection indicates that a full market recovery is unlikely to occur for at least the next two years.
Kering Reports Mixed Financial Results with Bottega Veneta Leading Growth
French luxury conglomerate Kering recently announced its 2024 financial results, revealing an overall 12% decline in revenue. Gucci, one of Kering’s flagship brands, suffered a significant 23% drop in reported sales, making it the weakest performer within the company’s portfolio. In contrast, Bottega Veneta saw a 4% increase in reported revenue and a 6% rise on a comparable basis, establishing itself as Kering’s most successful single-name brand.
Quiet Luxury: The Future of High-End Fashion?
The success of Bottega Veneta has been largely attributed to the growing appeal of “quiet luxury.” This trend focuses on understated elegance, high-quality materials, and timeless designs, steering away from overt branding and flashy logos. Unlike Gucci, known for its iconic double-G monogram, Bottega Veneta prioritizes craftsmanship and minimalist aesthetics.
One of the key advantages of quiet luxury is its long-term value. Consumers view these pieces as lasting investments, as their timeless appeal ensures they remain stylish for years. In fact, the price of Bottega Veneta’s Small Hop Bag rose by 26% in 2024, with most of the brand’s handbag prices increasing between 20% and 30%—a stronger appreciation rate than Kering’s stock itself.
Market Outlook: A Shift Towards Discreet Elegance
As luxury consumers become more discerning, the demand for understated, high-quality fashion is expected to rise. While brands like Gucci continue to struggle with shifting consumer preferences, those embracing the quiet luxury movement, such as Bottega Veneta, may find themselves at the forefront of the industry’s next evolution.
With the luxury market’s uncertain trajectory, brands that adapt to changing consumer expectations and prioritize timeless elegance over flashy branding may ultimately emerge as the new industry leaders.
Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial,investment, or other professional advice.
