With the rebound in Chinese spending offsetting the economic slowdown in the U.S. and Europe, European luxury companies could see their earnings increase in 2023. This growth is accompanied by price inflation. Perhaps at the risk of making luxury less accessible to less affluent customers ?
By reopening its borders and easing Covid restrictions since January 2023, China could well give a new lease of life to European luxury players. The most successful ones should even see their earnings increase along with their prices.
But this inflation could also worry less affluent customers, who may find the sector’s goods beyond their means. For the moment, however, the leaders of the sector, the LVMH group, owner of Louis Vuitton, Ferrari or the Swiss jeweler Richemont, have not yet seen their affluence decrease.
With their impressive pricing power, i.e. the proven ability to impose their sales prices on customers, and a still strong consumer demand (especially by the middle classes in emerging countries), the big luxury brands still seem to be leading the way.
Raising prices while keeping customers
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