What's Going On With Luxury?

Phoebe Philo nearly broke the internet this week with the launch of her namesake collection.  For years, speculation had been rampant about what the designer's latest efforts post-Celine would look like.  Which products would she focus on? Would there be any resemblance to her signatures at Celine?  And, how would the label be priced?  All of this and more were revealed this week, when the collection launched, and within minutes, many of the products sold out. (As of the writing of this piece, November 1, 72% of products on the site were completely sold out.)

To the questions circling around pricing, editors and Philo-fanatics alike noted the collections prices were high, but not totally out of line with brands like The Row and Bottega Veneta's top-end price points, especially in categories like footwear and handbags. Does that track?  We took to the data to confirm if that was indeed the case.  

With a tight number of products in the first collection, starting, median and average prices at Philo's label are higher in footwear and bags than both Bottega Veneta and The Row. Nonetheless, our analysis shows that Bottega has several outlier products with very high price points which give it that super-luxury positioning.

A Growing Gap in Interest and Performance

Philo's critically well-received launch and (mostly) sold-out collection is striking against the backdrop of luxury conglomerates' recent performance.  Last week Kering reported its Q3 financials which saw its revenue down 13% as reported and down 9% on a comparable basis.  The Group's Chairman and CEO François-Henri Pinault noted "challenging macroeconomic conditions and softening demand across the luxury industry."  LVMH, which saw robust albeit slowing growth in its fashion and leather goods business, stated that they were “staying vigilant in the context of macro geopolitical uncertainties.”  Prada also saw growth, boosted by its efforts at its little sister Miu Miu brand.

But for fellow luxury brand Hermes who caters to the top echelon of spenders, their sales and profits continue to beat analysts' expectations.  Their leadership noted that, "Despite an uncertain context, our outlook remains unchanged."  

While results were mixed, key themes noted across the luxury players were that there's macroeconomic uncertainty and the pace of luxury spending is slowing, especially amongst certain cohorts of shoppers.  And while the market seems to be cooling on luxury's overall outlook, performance varies widely brand-by-brand.  So what's going on with luxury demand and what can our data uncover about shifting trends?  Let's take a look.

Centric Market Intelligence search data shows us which brands are buzzy and seeing growing searches: Miu Miu, Loewe, Diesel, Bottega Veneta.  It simultaneously highlights slowing interest in YSL, Gucci and Louis Vuitton.  Overall, stable searches were seen for Hermes, Chanel, and Prada products.  Another key shift we can see is that consumers have growing interest in investing in luxury jewelry and watches, perhaps at the expense of categories like luxury bags and accessories.

Ultimately, there seems to be a changing of the guard taking place in dominant luxury brands, a shift that isn't solely due to consumers' desire for more (sigh) "quiet luxury." Rather, we're seeing the brands that are proving popular right now have something to say, let's call it "an unapologetic point-of-view".  Loewe and Miu Miu are perfect examples of this phenomenon.  Over at Loewe, Jonathan Anderson has successfully merged a legacy brand like Loewe with a modern playfulness that isn't easily replicated.  You can sneak a peek at how the Loewe brand is positioned below.  

Certainly, fashion and luxury are highly cyclical businesses.  But the luxury laggards would be wise to take a page from these outperformers highlighted here - while taking the long view of what it takes to be a relevant luxury brand both now and in the future.

Want to know more about what's going on with luxury industry?  The data highlighted today is just a small part of our recent Luxury Report. Clients can access the full report through the platform.