Luxury industry heavyweights may be stingier than usual with their champagne at holiday parties this year. It hasn’t been a stellar six months for the industry, with affluent consumers in both East and West reining in recent excesses. The S&P Global Luxury Goods Index, which tracks the industry, has fallen 9% since the middle of the year. Still, purveyors of luxury luxury need not give up on the festivities entirely. Consulting firm Bain estimates that the global market for personal luxury goods, from handbags to haute couture to watches, grew 4% this year. That’s disappointing compared to last year’s 20% growth, but it’s still something to be reckoned with amid fears of a slowing global economy.
The past two decades have been remarkable for the industry. Global sales have tripled to nearly $400 billion, mainly due to the rise of ultra-rich Asians. The biggest beneficiaries of this boom are European companies. They account for about two-thirds of luxury sales, according to another consulting firm, Deloitte, and nine of the 10 most valuable luxury brands in the world, according to market research firm Kantar. European luxury giant LVMH’s Bernard Arnault is the world’s second richest man. The industry remains one of Europe’s few bright spots at a time when the continent seems to be slipping away from economic and technological irrelevance. Why has it remained so immune to foreign competition?
