Luxury industry: what’s new?

By Benjamin Sauge
At this beginning of the year 2019, the Fashion Weeks that took place in London and Paris reminded us that luxury was trending towards a spectacular growth, after a highly eventful year 2018. A year when luxury groups, such as LVMH or Richemont, have reached their highest market capitalization. Yet, the main drawback in the sector, at this very beginning of 2019, could be Apple: the American giant suffered a 9% loss on the financial markets, after the disclosure of its forecast of revenues.
The luxury sector could be defined by creativity, globalization, consolidation and diversification, but if we stick to the Latin origins of the word, we can have another definition. The luxury sector is a sector that is indulgent towards the senses, regardless of cost; and the online company Net à Porter understood it well. The firm now gives its VIP customers the opportunity to try their clothes before they have to pay for them. This “Style Trial” concept could lead into major changes for the luxury sector, with an even higher customer focus. Another example of innovation in this sector could be the “Nordstrom Local” initiative launched by Nordstrom, which gives the customers access to personal stylists.
As every year, Virtuoso just revealed its report about the 2019 tendencies for the luxury tourism sector. According to the online luxury travel advisor company, the consumer needs concerning personalization have never been so important. Therefore, the Virtuoso Luxe Report highlights the fact that clients increasingly request a personal transport, a specific room number in their hotel, etc. Another major point of this report is that the most preferred travel category is “Multigenerational trips”. With the digital era and the reign of Instagram, the visual aspect needs, even more than it used to be, to be perfect. Finally, even if France and Italy will remain in 2019 the most popular destinations, Japan is expected to lead the “emerging destinations” group.
This may be one of the most important news of these last days in the luxury sector: Kering could be hit by a potential €1.4bn tax bill in Italy. The luxury group, which notably owns Gucci and Saint Laurent, has traditionally paid less taxes compared with its peers: last year, Exane BNP Paribas published a note showing that LVMH was facing an average 30.8% of tax rate in the past seven years, while Kering had averaged 21.2%. But Kering is not the only luxury group to be challenged by tax authorities in Italy. Among others, Dolce & Gabbana, Apple and Prada had been pursued in Italy, in recent years. For instance, in 2015, Apple had to pay a $318m fine after the Italian tax office revealed that one of its subsidiary failed to properly declare earnings between 2008 and 2013.

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