Latest news with #ClaudiaDArpizio
CNA
13 hours ago
- Business
- CNA
Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
Global sales of personal luxury goods are "slowing down but not collapsing", according to a Bain & Co consultancy study released Thursday (Jun 19). Personal luxury goods sales that eroded to €364 billion (US$419 billion; S$539 billion) in 2024 are projected to slide by another 2 per cent to 5 per cent this year, the study said, citing threats of US tariffs and geopolitical tensions triggering economic slowdowns. 'Still, to be positive in a difficult moment – with three wars, economies slowing down, inequality at a maximum ever – it's not a market in collapse,'' said Bain partner and co-author of the study Claudia D'Arpizio. 'It is slowing down but not collapsing.' Alongside external headwinds, luxury brands have alienated consumers with an ongoing creativity crisis and sharp price increases, Bain said. Buyers have also been turned off by recent investigations in Italy that revealed that sweatshop conditions in subcontractors making luxury handbags. Sales are slipping sharply in powerhouse markets the US and China, the study showed. In the US, market volatility due to tariffs has discouraged consumer confidence. China has recorded six quarters of contraction on low consumer confidence. The Middle East, Latin America and Southeast Asia are recording growth. Europe is mostly flat, the study showed. This has created a sharp divergence between brands that continue with strong creative and earnings growth, such as the Prada Group, which posted a 13 per cent first-quarter jump in revenue to €1.34 billion, and brands like Gucci, where revenue was down 24 per cent to €1.6 billion in the same period. Gucci owner Kering last week hired Italian automotive executive Luca De Meo, the former CEO of Renault, to mount a turnaround. The decision comes as three of its brands – Gucci, Balenciaga and Bottega Veneta – are launching new creative directors. Kering's stock surged 12 per cent on news of the appointment. D'Arpizio underlined his track record, returning French carmaker Renault to profitability and previous roles as marketing director at Volkswagen and Fiat. 'All of these factors resonate well together in a market like luxury when you are in a phase where growth is still the name of the game, but you also need to make the company more nimble in terms of costs, and turn around some of the brands,'' she said. Brands are also making changes to minimise the impact of possible US tariffs. These include shipping directly from production sites and not warehouses and reducing stock in stores. With aesthetic changes afoot 'stuffing the channels doesn't make a lot of sense,'' D'Arpizio said. Still, many of the headwinds buffering the sector are out of companies' control. 'Many of these (negative) aspects are not going to change soon. What can change is more clarity on the tariffs, but I don't think we will stop the wars or the political instability in a few months,'' she said, adding that luxury consumer confidence is tied more closely to stock market trends than geopolitics. President of Italian luxury brand association Altagamma Matteo Lunelli underlined that the sector recorded overall growth of 28 per cent from 2019-2024, 'placing us well above pre-pandemic levels.' While luxury spending is sensitive to global turmoil, it is historically quick to rebound, powered by new markets and pent-up demand. The 2008-2009 financial crisis plummeted sales of luxury apparel, handbags and footwear from €161 billion to €147 billion over two years. The market more than recovered the losses in 2010 as it rebounded by 14 per cent, with an acceleration in the Chinese market. Similarly, after sales plunged by 21 per cent during the pandemic, pent-up spending powered sales to new records.
Yahoo
a day ago
- Business
- Yahoo
Luxury's $1.7 trillion headache: The sector lost 50 million customers last year and is struggling with selfie-happy Gen Z
Luxury brands are retreating to exclusivity after years of trying to broaden their appeal, but they're now struggling to reconcile that elusiveness with younger consumers' desire to share and express identity online. With the luxury market shrinking—marked by a 3% dip in early 2025 and the loss of around 50 million customers—brands must urgently innovate to maintain relevance, exclusivity, and emotional connection in the social media era. Luxury brands have retreated back to their safe space of exclusivity, having explored new avenues to win customers during COVID. The only problem is, to win and retain the next generation of shoppers they must marry their need to remain elusive with a consumer who wants to share everything online. These companies have no time to waste. According to a spring update on the sector from Bain & Co, the industry is losing speed relatively quickly. The study released Thursday shows the sector's worth was €1.5 trillion ($1.7 trillion) in 2024, though for Q1 of 2025 estimates are shrinkage of 3% compared to last year. Even last year, personal luxury goods was one of the categories which marked the most notable slowdown, knocking from €369 billion in 2023 down to €364 billion in 2024. That marked its first contraction in 15 years—with the notable exception of the pandemic. And the gap between winners and losers in the luxury sector is also growing, added the author's writers Claudia D'Arpizio and Federica Levato. The gap between the top 75th percentile and the bottom 25th percentile performers increased by 1.5 times in Q1 2025 compared to a year earlier, with market leaders continuing to charge ahead while the bottom 20% to 30% of the sector continued to report a reduction in growth. Part of the problem is consumers are wrangling with what Bain & Co describes as the 'value equation'—basically, are they getting enough—be it experience, social and cultural kudos, or workmanship—out of the purchase for the elevated price they are paying? For a 'long period' luxury brands were trying to enlarge their customer base to be more inclusive, D'Arpizio tells Fortune. This was really reinforced in some categories with 'entry items like streetwear, sneakers, and even beauty—all the categories that could have been more relevant for young people, but also with people with less discretionary spending.' That strategy 'overcorrected' she added, with brands overly relying on iconic design or experiences, reducing their pace of innovation and hence, leading consumers to question if their spend is really worth it. 'So last year we had a big loss of customers—around 50 million less customers buying luxury product—in particular in the younger generation, and a big drop on customer advocacy,' D'Arpizio continued. 'What is happening now that the brands are trying to fix that, and trying to reignite this relationship with these customers without losing their exclusivity.' Shifting back to exclusivity is a more difficult ask when younger consumers are known as the social media generation for their propensity to post online. Gone are the days of galas with no cameras, of designer handbag back rooms with no filming allowed: It's all available on a For You Page within moments of ending. 'Luxury has always been about showing off,' D'Arpizio, who is Bain & Co's lead for the global fashion, luxury goods vertical, continued. 'The previous generation was showing off wealth and showing off accomplishments in life, now it's more showing off of your of your personality or your ability to choose your aesthetics, your quality of life. 'There is a big need, in particular in Gen Z, for sharing. This sharing means expressing their personality … but also a desire of conformity. These are two forces that are contradictory but in reality are a big driver for luxury consumption because luxury brands can provide this conformity, but then inside the luxury brand, mixing and matching, choosing your own style, developing your own style, creates your self-expression.' She continued: 'Social media has provided a huge impulse to luxury consumption because the potential of sharing with a larger audience has created both more customers but also in augmentation of their communication strategies and so they have a broader reach. 'So yes, they want to be exclusive, but they know the power of social media.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CTV News
a day ago
- Business
- CTV News
Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
These are Gucci bags in the window of a Gucci store in Pittsburgh on Jan. 30, 2023. (AP Photo/Gene J. Puskar, File) MILAN — Global sales of personal luxury goods are 'slowing down but not collapsing,' according to a Bain & Co. consultancy study released Thursday. Personal luxury goods sales that eroded to 364 billion euros (US$419 billion) in 2024 are projected to slide by another 2 per cent to 5 per cent this year, the study said, citing threats of U.S. tariffs and geopolitical tensions triggering economic slowdowns. 'Still, to be positive in a difficult moment — with three wars, economies slowing down, inequality at a maximum ever — it's not a market in collapse,'' said Bain partner and co-author of the study Claudia D'Arpizio. 'It is slowing down but not collapsing.' Alongside external headwinds, luxury brands have alienated consumers with an ongoing creativity crisis and sharp price increases, Bain said. Buyers have also been turned off by recent investigations in Italy that revealed that sweatshop conditions in subcontractors making luxury handbags. Sales are slipping sharply in powerhouse markets the United States and China, the study showed. In the U.S., market volatility due to tariffs has discouraged consumer confidence. China has recorded six quarters of contraction on low consumer confidence. The Middle East, Latin America and Southeast Asia are recording growth. Europe is mostly flat, the study showed. This has created a sharp divergence between brands that continue with strong creative and earnings growth, such as the Prada Group, which posted a 13 per cent first-quarter jump in revenue to 1.34 billion euros, and brands like Gucci, where revenue was down 24 per cent to 1.6 billion euros in the same period. Gucci owner Kering last week hired Italian automotive executive Luca De Meo, the former CEO of Renault, to mount a turnaround. The decision comes as three of its brands — Gucci, Balenciaga and Bottega Veneta — are launching new creative directors. Kering's stock surged 12 per cent on news of the appointment. D'Arpizio underlined his track record, returning French carmaker Renault to profitability and previous roles as marketing director at Volkswagen and Fiat. 'All of these factors resonate well together in a market like luxury when you are in a phase where growth is still the name of the game, but you also need to make the company more nimble in terms of costs, and turn around some of the brands,'' she said. Brands are also making changes to minimize the impact of possible U.S. tariffs. These include shipping directly from production sites and not warehouses and reducing stock in stores. With aesthetic changes afoot 'stuffing the channels doesn't make a lot of sense,'' D'Arpizio said. Still, many of the headwinds buffering the sector are out of companies' control. 'Many of these (negative) aspects are not going to change soon. What can change is more clarity on the tariffs, but I don't think we will stop the wars or the political instability in a few months,'' she said, adding that luxury consumer confidence is tied more closely to stock market trends than geopolitics. President of Italian luxury brand association Altagamma Matteo Lunelli underlined hat the sector recorded overall growth of 28 per cent from 2019-2024, 'placing us well above pre-pandemic levels.' While luxury spending is sensitive to global turmoil, it is historically quick to rebound, powered by new markets and pent-up demand. The 2008-2009 financial crisis plummeted sales of luxury apparel, handbags and footwear from 161 billion euros to 147 billion euros over two years. The market more than recovered the losses in 2010 as it rebounded by 14 per cent, with an acceleration in the Chinese market. Similarly, after sales plunged by 21 per cent during the pandemic, pent-up spending powered sales to new records. --- Colleen Barry, The Associated Press
The Independent
a day ago
- Business
- The Independent
Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
Global sales of personal luxury goods are 'slowing down but not collapsing,' according to a Bain & Co. consultancy study released Thursday. Personal luxury goods sales that eroded to 364 billion euros ($419 billion) in 2024 are projected to slide by another 2% to 5% this year, the study said, citing threats of U.S. tariffs and geopolitical tensions triggering economic slowdowns. 'Still, to be positive in a difficult moment — with three wars, economies slowing down, inequality at a maximum ever — it's not a market in collapse,'' said Bain partner and co-author of the study Claudia D'Arpizio. 'It is slowing down but not collapsing.' Alongside external headwinds, luxury brands have alienated consumers with an ongoing creativity crisis and sharp price increases, Bain said. Buyers have also been turned off by recent investigations in Italy that revealed that sweatshop conditions in subcontractors making luxury handbags. Sales are slipping sharply in powerhouse markets the United States and China, the study showed. In the U.S., market volatility due to tariffs has discouraged consumer confidence. China has recorded six quarters of contraction on low consumer confidence. The Middle East, Latin America and Southeast Asia are recording growth. Europe is mostly flat, the study showed. This has created a sharp divergence between brands that continue with strong creative and earnings growth, such as the Prada Group, which posted a 13% first-quarter jump in revenue to 1.34 billion euros, and brands like Gucci, where revenue was down 24% to 1.6 billion euros in the same period. Gucci owner Kering last week hired Italian automotive executive Luca De Meo, the former CEO of Renault, to mount a turnaround. The decision comes as three of its brands — Gucci, Balenciaga and Bottega Veneta — are launching new creative directors. Kering's stock surged 12% on news of the appointment. D'Arpizio underlined his track record, returning French carmaker Renault to profitability and previous roles as marketing director at Volkswagen and Fiat. 'All of these factors resonate well together in a market like luxury when you are in a phase where growth is still the name of the game, but you also need to make the company more nimble in terms of costs, and turn around some of the brands,'' she said. Brands are also making changes to minimize the impact of possible U.S. tariffs. These include shipping directly from production sites and not warehouses and reducing stock in stores. With aesthetic changes afoot 'stuffing the channels doesn't make a lot of sense,'' D'Arpizio said. Still, many of the headwinds buffering the sector are out of companies' control. 'Many of these (negative) aspects are not going to change soon. What can change is more clarity on the tariffs, but I don't think we will stop the wars or the political instability in a few months,'' she said, adding that luxury consumer confidence is tied more closely to stock market trends than geopolitics. President of Italian luxury brand association Altagamma Matteo Lunelli underlined hat the sector recorded overall growth of 28% from 2019-2024, 'placing us well above pre-pandemic levels.' While luxury spending is sensitive to global turmoil, it is historically quick to rebound, powered by new markets and pent-up demand. The 2008-2009 financial crisis plummeted sales of luxury apparel, handbags and footwear from 161 billion euros to 147 billion euros over two years. The market more than recovered the losses in 2010 as it rebounded by 14%, with an acceleration in the Chinese market. Similarly, after sales plunged by 21% during the pandemic, pent-up spending powered sales to new records.
Associated Press
a day ago
- Business
- Associated Press
Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
MILAN (AP) — Global sales of personal luxury goods are 'slowing down but not collapsing,' according to a Bain & Co. consultancy study released Thursday. Personal luxury goods sales that eroded to 364 billion euros ($419 billion) in 2024 are projected to slide by another 2% to 5% this year, the study said, citing threats of U.S. tariffs and geopolitical tensions triggering economic slowdowns. 'Still, to be positive in a difficult moment — with three wars, economies slowing down, inequality at a maximum ever — it's not a market in collapse,'' said Bain partner and co-author of the study Claudia D'Arpizio. 'It is slowing down but not collapsing.' Alongside external headwinds, luxury brands have alienated consumers with an ongoing creativity crisis and sharp price increases, Bain said. Buyers have also been turned off by recent investigations in Italy that revealed that sweatshop conditions in subcontractors making luxury handbags. Sales are slipping sharply in powerhouse markets the United States and China, the study showed. In the U.S., market volatility due to tariffs has discouraged consumer confidence. China has recorded six quarters of contraction on low consumer confidence. The Middle East, Latin America and Southeast Asia are recording growth. Europe is mostly flat, the study showed. This has created a sharp divergence between brands that continue with strong creative and earnings growth, such as the Prada Group, which posted a 13% first-quarter jump in revenue to 1.34 billion euros, and brands like Gucci, where revenue was down 24% to 1.6 billion euros in the same period. Gucci owner Kering last week hired Italian automotive executive Luca De Meo, the former CEO of Renault, to mount a turnaround. The decision comes as three of its brands — Gucci, Balenciaga and Bottega Veneta — are launching new creative directors. Kering's stock surged 12% on news of the appointment. D'Arpizio underlined his track record, returning French carmaker Renault to profitability and previous roles as marketing director at Volkswagen and Fiat. 'All of these factors resonate well together in a market like luxury when you are in a phase where growth is still the name of the game, but you also need to make the company more nimble in terms of costs, and turn around some of the brands,'' she said. Brands are also making changes to minimize the impact of possible U.S. tariffs. These include shipping directly from production sites and not warehouses and reducing stock in stores. With aesthetic changes afoot 'stuffing the channels doesn't make a lot of sense,'' D'Arpizio said. Still, many of the headwinds buffering the sector are out of companies' control. 'Many of these (negative) aspects are not going to change soon. What can change is more clarity on the tariffs, but I don't think we will stop the wars or the political instability in a few months,'' she said, adding that luxury consumer confidence is tied more closely to stock market trends than geopolitics. President of Italian luxury brand association Altagamma Matteo Lunelli underlined hat the sector recorded overall growth of 28% from 2019-2024, 'placing us well above pre-pandemic levels.' While luxury spending is sensitive to global turmoil, it is historically quick to rebound, powered by new markets and pent-up demand. The 2008-2009 financial crisis plummeted sales of luxury apparel, handbags and footwear from 161 billion euros to 147 billion euros over two years. The market more than recovered the losses in 2010 as it rebounded by 14%, with an acceleration in the Chinese market. Similarly, after sales plunged by 21% during the pandemic, pent-up spending powered sales to new records.
