Original by Dr. Steve Wong
March 10, 2023
On my recent business trip to Europe, I visited one customer who is a supplier to luxury goods manufacturers such as Prada, LV, Burberry, etc. This customer offers to have a long-term business relationship with us and increase business quantities. The reason is that their business was excellent during the epidemic period with increases in sales, unlike other business sectors. One of our suppliers wanted to reward himself for founding his business for over thirty years with a highly coveted Rolex watch model he has longed for years. After searching in the Netherlands, Switzerland and even online, to his disappointment, he found that no stock is available. He thus requested my assistance to help him find one in Hong Kong or the US.
The world’s largest luxury brand company, LVMH, operates 75 well-known brands, which include handbags, brandy, champagne, cosmetics, perfume and fashion. Their sales turnover was 300 billion Euro last year, with profits increased by 300% to 14.7 billion Euro. To meet their expansion plans, they have 25,000 job vacancies at present. The high-consumption market never has to worry about no business. During the epidemic period, many people were unable to go out. They fell into a situation of self-indulgence, seeking self-comfort and satisfaction of desire, which, with the convenience of online shopping, created considerable increases in sales.
The market for luxury products is different from the market for daily necessities. Its sales are not affected by its high price. This market is not only patronized by wealthy people; middle-class people are significant patrons of luxury goods. As for the low-income group, they also like to purchase luxury brands, their ownership brings psychological comfort, and for many, it symbolizes status.
Chinese customers account for one-third of the global luxury brands market and is expected to increase to forty percent by 2030. With tens of millions of Chinese tourists visiting France yearly before the epidemic, purchasing luxury-brand goods is a “must itinerary” for them, which has a higher priority than tasting French food. On the contrary, French people do not appreciate or are unwilling to purchase fashions or luxury goods from their country. Likewise, Americans, particularly people on the west coast, except for Asians, rarely pay attention to people carrying or wearing luxury-brand items.