Luxury in war times

In Great Britain, at the dawn of the First World War, Thomas Burberry invented the gabardine.

Soon after, Burberry was approached by the British war office to create lighter coats for the English soldiers as their coats were very heavy, launching the Burberry brand for the King court and aristocrats.

 

Worldwide, following the crash of 1929, the Great Depression of the 1930s and the Second

World War, people, tired of privations, returned to abundance and pleasure. And hence, the 50’s saw the birth of what was later called the consumer society.

 

Now let’s come back to the present, the current Russian-Ukrainian war has seen many luxury boutiques which are popular with wealthy Russian customers, such as Vuitton and Hermes, having to close their boutiques in Russia due to pressure from their local governments to show solidarity with Ukraine.

 

But what is the risk for the luxury market? Will it be impacted?

An air of déjà vu… (Beyonce’s words)We’ve been there, done that, bought the T-shirt…

Remember in 1939, Gabrielle Chanel had closed all her fashion houses during the Second World War, living off the royalties that her perfume brought her. Note that without the success of the Chanel N°5 perfume, which is the world’s best-selling perfume, Chanel would not have survived

the war and the closure of its stores.

 

The German occupation had put considerable economic pressure on this sector, including a ban

on trade with the world which, along with a shortage of raw materials and German levies

triggered sales of fashion and luxury in the black market.

 

Silk, requisitioned for the manufacture of parachutes, ropes and nets, made stockings impossible to find. But women were reinventing fashion made of odds and ends, pieces of string and a lot of ingenuity. Despite the restrictions, fashion and luxury survived this war!

Luxury is resilient and adaptable to times and difficult periods of history.

 

The future of luxury China is a huge consumer of luxury. By 2025, China will represent 45% of the luxury clientele.

 

China was one of the main pillars of the luxury market during the COVID-19 pandemic. Due to

China’s complicated relationship with Taiwan, many luxury professionals are worried that China

would feel threatened seeing the sanctions imposed against Russia.

 

LVMH, which has a global turnover of 64 billion euros, Russia represents only 2% of this

turnover and barely 1% of the turnover of Kering or Burberry.

 

Therefore, to answer the previous question, no, the global luxury market will not be impacted.

Russia remains a small market for luxury, and Russian customers tend to buy luxury products

abroad anyway, in places such as the French Riviera and ski resorts.

 

However, in reality ( let’s be honest, money talks), Europe will never be able to impose the same

restrictions on China if they decide to attack Taiwan. Luxury is the second flagship of the French

economy, just behind the aerospace market, and is heavily reliant on the Chinese.

 

Unlike other sectors, luxury did not suffer much from the Covid-19 health crisis, with some

groups recording higher net profits in 2021 compared to 2019; those of LVMH, thus, rose from

7.8 billion euros to 12 billion over two years. And once again thanks to our Chinese friends!!

All the lights are green for world luxury: the crisis may affect it but the rebounds will be all the

stronger.

 

And if there is one sector that has been able to withstand all the storms for millennia, it is

Luxury!