Despite the crisis and challenging conditions, some luxury brands are emerging as shining stars in the market, experiencing growth and success. Companies such as Hermès International SCA, LVMH Moët Hennessy Louis Vuitton (LVMH) and Kering are performing strongly, demonstrating their resilience in the face of economic and global events. These luxury brands differ significantly in terms of strategy and portfolio, but their success is underpinned by a number of common factors.
A strong presence in Asia
One of the key factors contributing to the success of luxury brands is their strong presence in Asia. In the case of Hermès International SCA, which has luxury leather goods, home accessories, jewellery and watches in its portfolio, we have seen that sales in Asia (especially in China) have remained very dynamic. This is even at a time of increased COVID-19 cases.
This success is in stark contrast to its competitors, such as LVMH Moët Hennessy Louis Vuitton SE, which have seen more moderate growth in the Chinese market. Asia, and the Chinese market in particular, is becoming an important source of growth for these brands, and their ability to maintain demand in the region provides them with a stable base in difficult times.
Renewed interest in luxury
Another factor underpinning their stable market position is consumer interest in luxury products. Surprising as it may seem, studies show that demand for luxury brands does not decline in times of economic hardship.
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The truth is that some consumers choose to invest their money in quality products that last and make them feel luxurious. Hermès, Kering and LVMH, which offer such products, have been able to maintain the loyalty of their customers even in difficult times.
Tourism revival
Luxury brands were hit hard by the decline in tourism during the COVID-19 pandemic. However, as tourism began to recover, brands such as Hermès, LVMH and Kering were able to capitalise on the renewed interest in their products.
Shops in airports and duty-free zones have returned to growth, contributing to their overall success. International tourism is slowly recovering and brands with a strong presence in these areas have an advantage in attracting customers.
Exceptional quality and brands
Last but not least, the success of these luxury brands can be attributed to their exceptional quality and reputation. Hermès, LVMH and Kering are known for their exceptional products, such as handmade Birkin handbags and exclusive pieces from Louis Vuitton and Dior.
These brands maintain a high standard of quality and customers are willing to invest in products that are icons of luxury and style. Their prestigious names and long traditions give them a competitive advantage that has helped them to continue to grow despite the impact of negative factors.
Resilient performance
These companies and brands show us that the luxury segment of the market can be stable and resilient to turbulent events if it is based on values, durability, quality and excellence. The performance of their shares confirms this principle.
