Shoppers go quiet, brands do a rethink

The global luxury goods industry is reassessing strategy as consumers skip loud logos and ostentatious branding

The luxury goods industry's first slowdown since the pandemic is separating the winners from the losers. Kering SA warned that its flagship Gucci brand will see a drop in profitability this year, with no sign of a rebound in 2024. The Italian label is getting hit harder than rivals as internal turmoil worsens the effect of weakening global demand.

The performance of the group controlled by the Pinault family contrasts with that of French rival Hermes International, which has more rich customers lining up for its $10,000 handbags than it can accommodate, insulating it from the downturn.

The first signs of a slowdown appeared about a year ago, when shoppers in the US curbed their spending on entry-level treats. Then in China, an uncertain macroeconomic backdrop and high youth unemployment dashed hopes consumers would splurge on bags and shoes after the strict lockdowns of last year. They have spent, but not as much as hoped.