"Go Woke, Go Broke" and the Fading Luxury Roaring 20's.
Digest #10 Amidst a declining luxury market, Victoria's Secret pivots back to its iconic "sexy" branding, while lab-grown diamonds ascend into the luxury scene and Gen Z increasingly favoring UGC.
Fashion
Is the Luxury Market facing a downturn? The boom in luxury goods is over as consumers pull back on their multiyear high-end spending spree.
The STOXX Europe Luxury 10 index, a key indicator of luxury market health, recorded its weakest quarterly performance since 2020.
Financial analysts are also adopting a more conservative stance on the luxury sector:
UBS is reducing its estimates because of slowing Chinese consumption.
Morgan Stanley cut 6% from its 2024 EPS forecast for luxury goods.
Bank of America has slashed its forecast by 7%.
LVMH stock fell nearly 6% following a Q3 revenue increase of 9%, indicating a slowdown in post-pandemic luxury spending amid economic uncertainties.
The trend also impacted other luxury brands like Kering, Hermes, and Richemont. They are reporting this week.
Amid China's market challenges, affluent elites continue their luxury spending, while the economically-strained middle class is more cautious. Affordable luxury brands like Michael Kors face declines, whereas Chanel is raising its premium product prices by 6-8%.
Latest insights from Amex Trendex report:
Quiet Luxury & Stealth Wealth: Focus is shifting towards craftsmanship and sustainability over designer labels.
High Buying Frequency: 80% buy luxury annually; 71% of Millennials and Gen Z prefer to buy over rent.
Popular Luxury Items: Top items are shoes, handbags, and jewelry, each at around 37%.
Quality & Values: 3 in 4 consumers value craftsmanship and sustainability; 70% opt for premium brands over fast fashion.
Key Attributes: Consumers prioritize high-quality products, brand values, and sustainability when choosing luxury brands.
Testing the waters with Lab-Grown Diamonds.
Sales of Lab-Grown have surged from less than $1 billion in 2016 to nearly $12 billion in 2022, accounting for over 17% of the total diamond market.
This trend is gaining widespread market acceptance: Pandora has twice upgraded its sales outlook, while De Beers has reduced the prices of mined diamonds by up to 40% due to declining demand.
Prada has introduced lab-grown diamonds into its fine jewelry collection just a year after its launch.
Similarly, LVMH has also embraced this innovation, offering its clientele high-end watches and jewelry adorned with lab-grown diamonds.
Go woke, Go broke. Victoria’s Secret reversal from its unsuccessful "woke" rebranding, is returning to its iconic "sexy" image. The revamped strategy aims to exceed $7 billion in annual sales through product diversification and a global store expansion, including 400 new locations.
The new strategy encapsulated by the phrase "sexiness can be inclusive," has already led to a 17% increase in stock price and a Q3 revised outlook.
Meanwhile:
How innovation is driving On’s meteoric rise.
By the numbers: How retailers stack up on inventory.
Recommerce economy is nearly worth 7 billion pounds in the UK.
Why KSA is pushing its fashion brands globally.
Could fashion week survive without sponsorships?
Farfetch: What Went Wrong? It has lost 97 percent of its market value in the last two years.
Fashion Tech
Gen Z is increasingly favoring user-generated content (UGC) games like Roblox and Fortnite over traditional games.
This trend has caught the attention of brands, leading to a surge in video game advertising. In the U.S., doubled from $3.1 billion in 2019 to $5.8 billion in 2022.
Gucci lead the pack for luxury activations on these gaming platforms, where brands can create fully immersive experiences that communicate their brand values in ways that resonate with the community.
Adobe unveils a futuristic “digital dress” that changes patterns on the go, creating a smart material composed of reflective light-diffusing modules, transforming entire surfaces into dynamic content displays.
One last bite:
WeChat Luxury Index 2023: How to Connect With 1.3 Billion Consumers?
How AI and Brain Science are helping perfumiers create fragrances.
Amazon wants shoppers to post influencer-style content.
Stylitics rolls out AI-powered virtual closet.
Peer-to-peer fashion rental marketplace Pickle picks up $8 million.
Until next time.Thanks for reading.
