display
Sure, artificial scarcity is part of the concept for luxury items, but Telfar may be exaggerating a bit.
Anyone who visits the Brooklyn-based label's website these days to order one of the not-so-expensive bags (between 150 and 257 dollars) will always find the same hint behind all colors and sizes: Sold Out!
Everything is sold out.
Nevertheless, the scam makes sense.
True exclusivity no longer consists in being able to pay a high price.
Rather, it shows that you are one of the few chosen, clever and well-connected people who have even got hold of one of the coveted bags with the big T in the circle logo.
For example Oprah Winfrey, the legendary Prince Harry and Meghan interviewer.
Or the model Bella Hadid, the actress Selena Gomez or the left American Congresswoman Alexandria Ocasio-Cortez.
The consulting firm McKinsey counts Telfar among the hottest global luxury brands, sub-category “affordable luxury”.
A few other newcomers will also come to mind when observing the scene.
The fashion brand Brain Dead from Los Angeles, for example, which comes across as a somewhat wacky artist collective, or the sweatpant refiner Entireworld by designer Scott Sternberg.
display
The emerging stars have a lot in common.
On the one hand, your business world is completely digital.
On the other hand, the imagery of their advertising videos is extremely tailored to a young audience.
The messages stand for a lifestyle of mindfulness, sustainability, diversity.
What is happening right now is the dawn of a new era in the luxury market, market insiders believe.
Source: WORLD infographic
Many younger people, says Marie-Therese Marek, luxury market expert at the consulting firm Bain, are willing to pay more for sustainability.
But not for Schmu, only for real values: “It's not about the ethical icing on the cake and a bit of climate neutrality, but about flawless sustainability across the entire value chain, which is then demanded,” says Marek: “That will lead to radical upheavals lead, from leather goods to diamonds. "
Radical upheavals are precisely what the luxury industry cannot need.
Top dogs like LVMH (Louis Vuitton) or Kering (Gucci, Bottega Veneta, Saint Laurent) have enough to do with coping with the effects of the pandemic.
A few months ago it seemed as if the top segment of consumption had largely been relieved of the everyday worries and restrictions of the average consumer.
"The rich do not let their mood spoil", stated the "Frankfurter Allgemeine Sonntagszeitung" in November.
The industry is suffering
display
In fact, the initially double-digit negative figures in 2020 decreased from quarter to quarter.
But in the end there was a big minus for the luxury brands that had been spoiled for success for many years.
“2020 was the absolute horror year for the luxury goods industry,” is Marek's summary.
Kering shocked its shareholders in February with the news that sales in the final quarter of four billion euros were a surprisingly hefty eight percent lower than in the same period of the previous year.
It didn't help much that jackets from the in-house brand Bottega Veneta are sold online for prices around 3,900 euros.
The worst hit was Kering's renowned Gucci brand: minus ten percent.
Even if CEO François-Henri Pinault sees the company on the mend again - he had to cut the dividend by around 30 percent, while sales for the full year slumped by 17.5 percent to 13.1 billion euros.
display
Kering's eternal competitor, world market leader LVMH, had to cope with a similarly severe drop in sales of 17 percent to 44.7 billion euros last year with its 75 premium brands.
Operating profit fell even more rapidly - by 28 percent.
With a single-digit decline, the Hermès company with its noble leather goods came through the Corona low with comparatively little plucking.
Nevertheless: The turnover shrank by six, the operating profit by a good eleven percent.
This is harmless compared to the losses suffered by the many smaller suppliers of fine watches, clothing and jewelry, as well as leather goods.
Overall, according to a Bain study, the business volume in the luxury industry slumped by a full 64 billion to 217 billion euros worldwide - as much as last year in 2014.
A bet on a glorious future
The same picture can be seen with other goods of the upscale millionaire needs: yachts, private planes, established art, luxury cars.
Filling the dent again will be really hard work, Bain expert Marek expects.
In terms of sales, the industry will catch up with the pre-crisis period in the coming year at the earliest.
Profitability decreased by 60 percent in 2020.
The industry could probably make up for half of the losses this year.
Many investors are apparently anticipating that the luxury companies will find a seamless connection with the old heyday.
Their share prices remain close to the pre-crisis record levels, albeit with severe fluctuations.
LVMH is valued at around 280 billion euros on the stock exchange, more than any other European company, apart from the Swiss food giant Nestlé.
For comparison: despite the recent soaring, VW is not even a quarter of the value of LVMH.
But the high valuation of the luxury companies is a bet on a glorious future.
The high costs of design, manufacture and distribution of the luxury goods can hardly be reduced, even if sales are stagnant.
In addition, the industry is becoming increasingly dependent on the still booming Chinese luxury market.
In China, which was freed from the economic shackles of the epidemic relatively early last year, they are growing faster than in other regions of the world.
According to a study by McKinsey, only providers who generate at least a third of their income in this region benefit from the good ratings on the stock market.
Next challenge: young buyers
The meteoric rise of e-commerce is also affecting the luxury market at least as badly as other consumer areas.
Sales on the Farfetch online marketplace soared by 75 percent in the spring quarter of 2020 compared to the same period in the previous year, according to McKinsey.
display
At Farfetch, buyers can choose between baby bibs from Gucci for 269 euros each or Fendi for 306 euros in a pack of three.
In four years' time, e-commerce for luxury goods will have overtaken sales in stationary stores on the world's noble miles, says Marek.
Young luxury buyers with an affinity for online are particularly challenging the industry.
The move to e-commerce isn't even the real issue - for them, see Telfar and others, it's about environmental credibility.
Motto: Luxury for Future.
“The sustainability claim is a global issue,” says Marek, and responding to it is a question of survival in the long term, even for the giants of the upscale lifestyle such as LVMH or Kering.
“As early as 2025, generations Z and Y” - people under 40 - “will be responsible for around two thirds of global sales of personal luxury goods,” she says.
For them, apart from the ecological claim and digital lifestyle, what always applies: “The fascination of luxury is unbroken.” Result: For the period from 2020 to 2025, an annual average market growth of ten percent is to be expected.
Truly luxurious growth rates.
“Everything on stocks” is the daily stock market shot from the WELT business editorial team. Every morning from 7 a.m. with the financial journalists from WELT. For stock market experts and beginners.
Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer.
Or directly via RSS feed.