A few weeks ago, I had lunch at the Polo Lounge with an industry executive who also happens to be an industry client. He spends a lot of money on small luxury goods like handbags and clothing—a guaranteed six figures a year, maybe some years seven. He’s a cheerleader for the business because he is also in the business. He did, however, express some disillusionment. He doesn’t like a lot of what’s being produced by the big, conglomerate-backed brands. It all looks the same, etcetera, why should he bother?
Why indeed. The ubiquity of Big Luxury is deeply suspect amid a moment when cool-hunters are searching for something not only less accessible, but less known. The market for personal luxury goods expanded by just 4 percent in 2023, with performance softening each quarter, according to Bain’s annual report, probably the most comprehensive examination of the industry out there. And much of that growth can be attributed to price increases, not volume increases. Of course, some companies still did all right in the end. Just last week, LVMH—which owns 75 different businesses—announced a decent ending to its fiscal year, restoring confidence in the market and allowing its stock to soar, making chairman and C.E.O. Bernard Arnault the richest man in the world, according to Forbes, surpassing his lunch buddy Elon Musk. China is finally bouncing back, spending-wise. At the same time, something is going on with American customers—especially those on the younger side, who are growing tired of fashion’s hype machine. The U.S. represented 17 percent of LVMH’s overall revenue in 2023, down from 21 percent in 2022 and 2021.