In 2024, the luxury world is challenged by slowing Chinese consumption, highlighting previously unexpected dynamics. While giants like LVMH are experiencing a notable decline in sales, Hermès continues its ascent, bolstered by its timeless reputation. This situation reveals significant differences in resilience among brands, where the shine of Gucci slightly dulls, suffering from a substantial drop. Behind these numbers emerges a question: is this merely a cyclical phase or a deeper trend? The game of renewal strategies, as evidenced by Gucci’s new artistic directions, suggests potential recovery paths for the sector, which is still in search of enthusiasm from the Chinese market.
The slowdown in consumption in China continues to weigh on the luxury sector. In the third quarter of 2024, the results from luxury giants reflect this trend. LVMH observed a 4.4% decline in its sales, while Kering, impacted by a 25% drop in Gucci’s sales, suffers a 15% fall. In contrast, Hermès stands out with a 14% increase in its revenue, emphasizing its position as a timeless luxury house.
This challenging economic context for luxury in China seems, according to some analyses, to be of a cyclical nature. Chinese spending on European luxury products shows a persistent appetite, and recovery seems only a matter of time.
The economic slowdown in China and its repercussions on the luxury sector
For several years, China has held a central place in global consumption of luxury goods. However, a recent economic slowdown has led to a significant drop in spending in this sector. The disappointing results of giants like LVMH illustrate this trend. Despite a 3% decline in the third quarter, the world leader continues to closely monitor the Chinese market, hoping for a forthcoming revival of the economic dynamism.
Reactions of major houses to the Chinese challenge
Major luxury houses have taken the lead to adapt to this changing context. Kering’s Gucci house, for example, has hired Sabato de Sarno as its new artistic director to renew its collections and try to appeal to an ever more demanding Chinese audience. While some brands suffer, such as Gucci’s 25% drop in performance, others like Hermès continue to hold their own with a 14% increase in their revenue. This company has managed to maintain its image as a timeless house, sheltered from economic fluctuations. An analyst report from Oddo suggests that the situation is cyclical and that the Chinese market will soon regain its vigor.
Future perspectives: anticipation and innovation
To overcome this slowdown, experts advocate for an innovative approach. The importance of constant innovation is emphasized, as well as the necessity for genuine efforts regarding sustainability. In this regard, initiatives like LVMH’s new campus, aimed at training its employees on environmental issues, are at the forefront of responses to the economic malaise. Although the luxury market is still under pressure, the resilience and adaptability of major brands indicate a potential for recovery. For more details on these trends, check out the full article from Les Echos.
