Photo Credit: “Diane Von Furstenberg Collection Target Dadeland Station” by Phillip Pessar is licensed under CC BY 2.0. | |
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“DVF has a chance, provided they are brave enough to introduce fresh ideas in their business model and in the brand narrative, on top of interesting designs. I fear that just approaching the market with the usual recipe – ‘We are DVF and we are back’ – may not be enough, no matter how nice the collections may be,” said Professor Alessandro Balossini Volpe.
Diane Von Furstenberg Is Reinventing Her DVF Brand, Again
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Diane von Furstenberg has reclaimed control of her eponymous DVF fashion brand from Chinese licensee and distributor Glamel, after four years of letting the brand languish under its global management, though it will still continue as a partner in the Greater China market.
And she’s brought on fashion industry veteran Graziano di Boni to restore the brand to its rightful place in the fashion industry hierarchy.
As extraordinarily successful as she’s been in her life, or in marketing-speak building a personal brand, Diane von Furstenberg hasn’t matched it in managing her DVF business.
Now von Furstenberg hopes she’s found the right formula to turn the company around.
“I am very excited to support Graziano’s leadership redesigning the company as he surrounds himself with talent that understands the zeitgeist of today and respects and appreciates the richness of the assets of the past,” she said in a statement.
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“The desire is fading for the broad idea of luxury as purchases become less frequent. Spending on luxury has less momentum. It could be more of the same, or worse, in the coming year,” Chandler Mount, The Affluent Consumer Research Company.
American Luxury Consumers Pull Back, Challenging LVMH, Tapestry, Capri and Ralph Lauren
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All eyes in the luxury market are fixed on the slowdown in China. With the notable exception of Hermès, most luxury brands are reporting declining sales there.
However, cracks in the U.S. luxury market are beginning to show too. In their latest reporting, LVMH, Tapestry, Capri Holdings and Ralph Lauren are experiencing a slowdown in North America, not as steep as seen in China but it is happening here nonetheless.
Bain reported that personal luxury goods sales in the Americas slowed with each passing quarter in 2023 to end down 8% over 2022. Most every luxury brand will feel the pain if U.S. consumers continue to pull back, since Americans accounted for roughly 30% of revenues in the nearly $400 billion (€362 billion) personal luxury goods market last year, compared with Chinese consumers at about 23%.
“The U.S. luxury market continued its downward trajectory in the second quarter 2024, even as inflation eased,” shared Michael Gunther, who heads up insights at Consumer Edge (CE), which tracks over 100 million U.S. credit and debit card payment accounts. It then slices and dices the data to reveal where purchases are made and the demographics of the spender.
“The brands that are more dependent on high-income shoppers are holding up better, but still, high-income spending is down, dropping by 5% in the second quarter 2024, the lowest point since second quarter 2020,” he said, adding, “The biggest takeaway from the data is that the weakness is broadening.”
And that is just what the latest results from LVMH and native American luxury brands Tapestry, Capri and Ralph Lauren reveal.
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Luxury industry insiders suffer from the "Street Light Effect" cognitive bias. They are looking for innovation where its easy and where every one else is looking, instead of where real innovation is likely to be found.
Get Ahead In The Luxury Market With The 'State of Luxury' Report
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What do luxury industry insiders say about the state of the luxury business? How do they view the normalization currently underway? How can brands set strategies, including advertising and marketing, for the period ahead as some luxury companies such as Chanel, Hermès and flagship brands within LVMH blow past others?
Now in its seventh year, the State of Luxury: An Industry Insiders’ View report is one of the most reliable barometers of corporate-side attitudes to customer demand for luxury goods and services.
This year's study pulls together first-hand responses from nearly 450 executives worldwide across diverse luxury sectors to portray a picture of the opportunities and challenges luxury companies face in the rapidly evolving industry, making the report indispensable for luxury businesses.
Explored in the report are current and future business conditions in the luxury industry, including perspectives from those operating in the luxury goods and luxury services and experiences sectors.
Of special emphasis in the study are innovation and advertising and marketing strategies that work and do not work in the current market and how companies can adapt as the market normalizes after the disruptions caused by the pandemic.
The 100+ page report in easy-to-digest Powerpoint format covers:
- State of the luxury goods sector, company growth and distribution strategies
- How luxury services and experiences are evolving with customer expectations
- Advertising and marketing strategies that resonate with the market, including company and agency-specific perspectives
- Business outlook for the luxury market, both for the industry as well as the executives’ own company
It tracks trends from last year to this year and includes both data and expert analysis to make the research actionable so it isn’t just another report on the shelf but a resource to guide corporate planning and strategies.
At its core, the report is a collaborative effort for luxury industry executives to share, learn and help each other as the business environment becomes ever more complex and challenging.
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“For affluent consumers, luxury is a privilege, not a right, and as they look at the challenges they and the world at large face this coming year, they are signaling a willingness to trade off excess spending on luxury. Many plan to batten down the hatches and ride out any potential economic storm, as they did in the Great Recession of 2008 and 2009,” said Chandler Mount, Affluent Consumer Research Co.
Luxury Brands Must Prepare For A Reset:
Here's The How And Why
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Over the last three years, the luxury market has experienced a whirlwind of change. After rising 7 percent in 2019 before the pandemic, it suffered a steep decline in 2020, only to bounce back with spectacular growth through 2021 and 2022.
Bain-Altagamma expects the good times to keep rolling in 2023. “The personal luxury market is projected to see further growth of at least 3-8 percent next year, even given a downturn in global economic conditions,” they predict.
However, since the past is often the best predictor of the future, a different outlook is suggested based on results from the Great Recession of 2008 and 2009. Global personal goods luxury sales dropped 9 percent from 2007 to 2009, disproving the conventional wisdom that the luxury market is immune to economic downturns.
Whether the economy takes a slight tumble or a big fall in 2023, more economists are warning about an economic downfall that will impact the luxury market too. Analysts are warning of a potential " Richcession."
To prepare the Washington, DC-based Affluent Research Company has just published a new study among 2,000+ affluent consumers, called Research The Affluent Luxury Tracker. It provides a forward look at how the affluent will adapt their spending and purchase behavior if the economy falters, which they fully expect it will.
“Affluent luxury consumers are the most highly-educated and well-informed consumers, and some 69 percent see a recession coming within the next six months, if it isn’t already here,” said Chandler Mount, the study’s lead researcher.
“Anticipating the worst, the affluents aren’t waiting for the other shoe to drop. Nearly half (48 percent) surveyed said, ‘Now is a good time to limit my purchasing,’” he continued, noting that the survey sample was skewed heavily toward high-net-worth-individuals (HNWI) with $1+ million net worth (excluding their primary residence), a notoriously difficult consumer segment to survey.
Not unexpectedly, the HENRYs, with less than $1 million net worth, were more inclined to cut back (52 percent). But even 46 percent of the HNWI are lining up to reduce their purchasing. This will pose significant challenges to luxury brands that depend upon the HNWI’s greater spending power if they do pull back.
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“A groundbreaking and truly exceptional instruction manual offering a wealth of marketing insights and information, Meet the HENRYs is impressively well written, organized and presented, making it highly recommended.” writes Midwest Book Review.
Meet the HENRYs: The Millennials that Matter Most for Luxury Brands
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Meet the HENRYs breaks new ground by uncovering a new target consumer--Millennials with money.
It's a segment of the largest generation of Americans with more discretionary income than the rest of the cohort today and poised to acquire more money in the future.
These are the millennials that matter most to brands today and tomorrow
For the foreseeable future, millennial HENRYs (High Earners Not Rich Yet) will be the consumers that every brand manager, marketer and retail executive will need to know well.
This subset of the largest generation of Americans, earns between $100K and $250K–the income cohort that accounts for 40 percent of all household spending. Most important, however, these are the consumers who are on track to become the ultra-affluent ($250K +) of the future.
This forward-looking book examines trends and profiles emerging disruptive brands that millennial HENRYs are drawn to, and explains how many of these innovative brands are setting themselves apart from the traditional top-tier luxury brands.
It takes you on a deep-dive into the steps the smartest of the traditional luxury brands and retailers are taking to keep up with a new generation of consumers who are anything but traditional in their approach to luxury spending.
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Unity Marketing | 717-336-1600 or pam@unitymarketingonline.com | | | | |
