The phenomenal upturn in the luxury industry

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By Dominique Baillard

Revenues are skyrocketing again. In 2020, the waves of confinement and the paralysis of air transport had literally deprived “fashionistas” of their favorite pastime. The luxury sector, indifferent to the crisis, then plummeted. But this losing streak has now been overcome: last year's sales returned to the level of 2019.

And the year 2022, despite the threat of Omicron, looks very promising. That is why, in the fashion capital of the world, the big fashion houses are determined to reintroduce public parades this year. This is the case for the vast majority of haute couture brands, which hold their fashion shows next week, since "fashion week" actually lasts 15 days.

Fashion houses also offer virtual events

Internet has become a new channel for this industry. People buy less on the road, but much more from their screens. With covid-19, online sales doubled last year. They now represent 22% of global luxury sector turnover and there is still plenty of room for growth. In this context, offering a virtual fashion show is essential.

The luxury industry is also enthusiastically exploring the new fields opened up by Internet tools. Balmain created the event with an NFT (non-expendable token) auction for three models specially created for the Barbie doll. The costumes will also be available in an adult version, regardless of gender, as the pink clothing can be worn by both Ken and Barbie fans.

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According to the Morgan Stanley bank, the opportunities of "gaming", the association of luxury with video games or the virtual worlds of the metaverse could generate 50,000 million euros in additional sales. The turnover is currently 283,000 million euros.

Luxury was also reached by inflation: prices skyrocket

In this sector, in which things are not done by halves, one could even speak of hyperinflation, since prices go up by double figures. The small Chanel bag in quilted leather with a gold link chain has risen 30%, going from 5,500 to 7,300 euros in a few months. Of course, the increase in wages is mentioned, as well as the supply problems that push houses to buy from their suppliers to ensure their production line.

But the reality is more prosaic: when a bag sells too well, its creator increases it to create scarcity, scarcity that drives demand. It is an economic principle typical of the luxury sector, which makes use and abuse of it. The "it bag", the bag to have, has become a financial investment, whose value grows exponentially.

Does this price increase explain the success of vintage luxury sales?

In the world of luxury consumption, price is secondary. If the demand for second-hand clothes and objects soars, it is above all to meet the expectations of the ultra-rich, concerned about not worsening the carbon footprint of this industry, which is already in the red.

More and more brands are organizing their own recycling channels, a source of sales worth tens of billions of euros. This eases the guilty conscience of your customers, but not really the planet. As the luxury industry produces more and more to meet demand, its carbon footprint is set to get even worse in 2022.

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