Luxury Brand Management: A World of Privilege, 2nd Edition

Conclusion

The strong growth of the luxury industry, as explained throughout this book, is the result of both the development of emerging markets and of the creation and growth of a middle class who can afford, from time to time, the luxury of an exceptional purchase.

This trend has been identified as a democratization of luxury by some observers who also consider that it is partly due to the emergence of so-called entry-price products. We find this analysis inaccurate as the middle class always has had access to certain luxury goods. Fifty years ago, it was already possible to buy a Christian Dior tie in polyester in Australia or Latin America at five times less than that of a silk tie. This positioning is what we call now intermediate luxury. Entry-level products have always existed, but in the course of these past fifty years, they have actually decreased in volume and their quality has improved considerably.

The growth of the luxury market has been oscillating, apart from short-term crises, between 8 and 10 percent each year, and will continue as long as emerging markets develop and that the middle class of the four BRIC countries (especially China) will continue to grow.

Five major trends will characterize the luxury industry evolution.

No Place in the Middle

The brand with average price positioning will face difficulties in the years to come. They will be more and more uncomfortable in position between Chanel, Valentino, and Gucci on one side and Hugo Boss, Lacoste, and Ralph ...