This Was Powerful Enough to Create and Destroy Billions of Dollars of Value in The Span of Weeks…

Not crypto! In September 2024, steps taken by the Chinese government to stimulate its economy resulted in a five day rally of publicly traded luxury stocks like Hermes, Richemont (owner of Cartier), and LVMH, in some cases about 15%. But not even a month later, Fortune reported, “LVMH’s Bernard Arnault sees nearly $10 billion in wealth wiped out after share-price bloodbath.” 1


What’s going on?

In LVMH’s case, the one day plunge was on the back of sagging sales in 3Q24. But the luxury market is now a truly global, if unpredictable story, with various indicators now contributing to – or being affected by – its success or pullback. When looked at through the lens of publicly traded consumer stocks, the luxury market is often viewed as countercyclical. But given changes in consumption patterns, the rise of a growing middle class in numerous economies (most notably, China and India), and other shifts under the hood – the luxury market should no longer be looked at in the same way we did a decade ago.


What IS the “Luxury Market” in 2024?

Is it publicly traded household names like LVMH? Yes, but it increasingly should be also viewed through a variety of other lenses to identify shifts across markets and asset classes.

For example:

  • Given the post Covid shifts in consumer patterns from goods to services, how does hospitality, and particularly, high end travel and hospitality, figure into the picture?
  • Should art be considered as an increasingly accessible asset class? A growing number of solutions are emerging that facilitate fractionalized ownership of art.
  • Many have focused on China, but with a growing middle class that purchases gold jewelry both as an investment and way to preserve capital, how does India’s trajectory impact the space?
  • When the iPhone first came to market, it was considered a “luxury purchase.” In the more than 15 years since its launch, for many consumers, it has become a consumer staple. What is the next emerging luxury good that may “go mainstream?


What Investors Are Watching

With Bain sizing the global luxury market at north of $1.6 trillion in 2023, there is clearly not just much at stake for existing players, but considerable upside to new movers in the market.2

While luxury vehicles, hospitality experience and consumer goods have dominated the market in years past, with Millennials now possessing nearly one-quarter of global consumer spending power, investors are keen on understanding new habits, preferences and dislikes of the ascendant spending class. In fact, Millennials now represent nearly 5% more of global consumer spend than their predecessors in Gen X, who are hitting their “prime earning years” now.

Because Millennials are the first generation to be ”raised on social media,” their consumption habits and incentives diverge from previous generations. A 2024 Boston Consulting Group (BCG) reported that while some factors like quality and durability of good fuel luxury purchases, other factors like brand recognition and scarcity are far higher than their predecessors.3

The full impact of social media, representation and comparison has not fully been borne out yet – but it is clear that the brands and investments that are increasingly winning are successfully melding attainable, but scarce, with high quality – to land loyal customers. Many of these brands remain privately held, and luxury investors are increasingly looking beyond public markets to access the spending power of the largest – and highest spending – generation.

Author: Shannon Murphy, Head of Research, iConnections

  1. Royle, O. R. (2024, October 17). LVMH’s Bernard Arnault sees nearly $10 billion in wealth wiped out after share-price bloodbath. Fortune Europe. https://fortune.com/europe/2024/10/16/bernard-arnault-net-worth-wealth-wipeout-lvmh-share-price-bloodbath/
  2. D’Arpizio, C., Levato, F., Steiner, A., & Montgolfier, J. de. (2024, February 22). Long live luxury: Converge to expand through turbulence. Bain. https://www.bain.com/insights/long-live-luxury-converge-to-expand-through-turbulence/ 
  3. Danziger, P. N. (2024, July 19). Status drives millennials to spend more on luxury goods. is conspicuous consumption coming back?. Forbes. https://www.forbes.com/sites/pamdanziger/2024/07/18/status-drives-millennials-to-spend-more-on-luxury-goods-is-conspicuous-consumption-coming-back/