A classic Chanel bag, that is, a medium-sized 2.55, now costs €9,700, a third more than it cost before the pandemic and double what it cost a decade ago. The French firm usually raises the price of its classics twice a year, “due to inflation and currency fluctuations,” counted recently at a press conference its financial director, Philippe Blondiaux. Chanel, however, broke billing records in 2022; its sales rose no less than 17%, exceeding 17 billion dollars, 23% more than before the pandemic. As stated in Business of Fashion A few days ago, the French house is investing more than 500 million euros in “improving the experience of its exclusive clients”, opening new boutiques on Rodeo Drive (hence its cruise show moved to Los Angeles), finalizing a new opening in London and implementing a hundred private rooms for its most premium consumers.
This idea, that of targeting what luxury marketing calls big spenders (big spenders), is the one that seems to be applying this market in recent months. Brunello Cuccinelli has created a private store in New York and Louis Vuitton is finalizing the inauguration of a VIP room at the Qatar airport, without counting the spas (Dior) or hotels (Bulgari) that have been opening in recent months. . If they do it, it is because they can: there is no large luxury firm that has not seen its turnover grow exponentially in the past year. The LVMH conglomerate, owned by Bernard Arnault, the world’s richest man, has a turnover of no less than 79.2 billion euros in 2022, of which a quarter, that is, 20 billion, belongs to Louis Vuitton, which has just set a new historical record. Hermès, for its part, grew 23% more in 2022 compared to 2021. “We don’t know what will happen in the second half, but for now the market is robust and healthy,” commented from Capri Holdings, owners of Jimmy Choo, Michael Kors and Versace (which has also raised prices) during the presentation of its results a few weeks ago.
In a world expecting a recession, super-luxury is bursting its coffers. According to the latest Bain & Co report. “Customers in this market, which now number around 400 million, will number 500 in 2022. They are hungry customers for unique products, which is why brands have placed VICs (very important customers) at the base of their strategies.” The dynamics of capitalism make accumulation accelerate in a context of crisis: according to Forbes, In 2021, in the midst of the pandemic, there were 5 million more millionaires (that is, people with more than one million euros) and it is estimated that the super-millionaires, that is, 1% of the population, already accumulate approximately 40% of the wealth.
What has grown surprisingly in the past year (more than 20%) is the purchase of products, not the enjoyment of premium experiences, according to the report by Bain & Co. and Altagamma; that is, bags, watches, cars etc. five and up to six figures. It makes sense: during the last two years, both firms and consultancies have sold the idea of buying certain models as an investment that is revalued from time to time. The last report of Deloitte and Credit Suisse on “products that resist uncertainty and inflation” he placed handbags, jewelry and watches as objects that appreciate between 4.5 and 6.5 per year. Chanel was one of the brands that appear in the report as “the safest.” “If you are going to buy a luxury bag, Chanel is one of the few brands that is most likely to increase in value after leaving the store,” they explain in an article at Sotheby’s auction house.
The idea of investing in a bag like investing in a brick is not new. Almost a decade ago, the news went viral stating that an Hermès Birkin bag was as safe as gold. Hence, in fact, many economic means have argued In recent months, the price escalation of the French house is linked to wanting to look like Hermès in the collective imagination: objects as expensive as they are exclusive, desirable, and “safe”.
In the spring of 2020, after two months of confinement, Hermès invoiced two and a half million euros in a single day in a store in Guangzhou. Then they started talking about revenge shopping or ‘revenge buying’ (a sociological term that was coined when, in the eighties, when China began to consume wildly after the fall of communism), an idea rooted in ‘carpe diem’ in uncertain or tragic moments. With restricted travel in Asia, the great luxury market, the firms began to strengthen their presence there, but now, three years later, they have directly decided to open these private stores with hours for those super-rich looking for their classic models. They have realized that indulging, in the minds of these consumers, reads like investment. Something similar happens with high jewelery: Cartier, for example, has reached 10 billion euros a year, and Bvlgari is opening another large headquarters in Italy. “Optimism among the most luxurious jewelry brands has never been greater,” recently stated in The New York Times about it.
None of this is new, but it is slightly different. Luxury never fluctuates in times of crisis, but experts believe that there will be more consumption now than during the 2008 crisis. “This time there is not so much concern when it comes to conspicuous consumption,” explain in The Financial Times. “After the global financial crisis, governments bailed out companies, after the pandemic, Americans alone spent two trillion dollars on ‘stimulus’ in one year.” “This probable recession affects the lower and middle classes, it is different.” There are more millionaires, more millionaires from different generations and more millionaires willing to follow the idea of conspicuous consumption, coined by the sociologist Thorstein Veblen in no less than 1899: at uncertain times, a part of the population is willing to spend a lot money on a product just because that product costs a lot of money.
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