Bruno Pavlovsky, the president of fashion at Chanel, issued a cautionary message to the fashion and luxury goods sector, urging them to brace themselves for a demanding year amidst the slowdown of global economic growth.
Schwätze während chanel‘s Metiers d’Art show in Manchester, Pavlovsky highlighted the forthcoming challenges that lie ahead for the industry.
Pavlovsky stated that the Secteur de luxe will undoubtedly be impacted by the challenging economic conditions prevalent in every country worldwide, adding that luxury is not protected from the economy and next year’s situation will be tougher than in 2023.
Chanel’s fashion chief disclosed that the brand experienced a decline in store footfall and sales from new and infrequent customers in the current year. This trend was attributed to the significant inflation rates in the United States and Europe, as well as the unprecedented levels of youth unemployment in China.
Luxury sales in the US experienced a modest increase of 2% in the third quarter of the year, following a period of stagnation in the previous quarter. In Europe, the growth of revenue for luxury brands slowed down to 7% from the previous 19% during the months of April to June. Regarding this decline, Pavlovsky commented that it is a typical occurrence as luxury goods cannot maintain continuous double-digit growth.
Other luxury companies, such as LVMH and Gucci, have also expressed concerns about the future of the luxury industry. These companies have experienced lower sales growth or declines in revenue due to worries about inflation and recession. To illustrate, Richemont, the owner of Cartier, recently reported their half-year results which revealed a 3% decrease in global luxury watch sales and a 17% decline in the Americas region.
According to HSBC market analyst, luxury is not recession-proof, and the strong growth of luxury goods sales in the post-COVID-19 pandemic period is likely over.
