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Chanel Exec Cautions on ‘Luxury Fatigue’ Amid China Slowdown November 05, 2024 (0 comments)
New York, NY--As the luxury market grapples with slowing demand in China, Frederic Grangie, head of Chanel's watch and jewelry division, highlighted a looming challenge that could impact the sector more profoundly—oversaturation and what he described as "luxury fatigue."
[Image via istockphoto.com]
In an interview with Swiss newspaper Le Temps, Grangie cautioned that the years 2025 and 2026 are set to be particularly challenging for the industry.
A report by Barron's highlighting the interview stated that while the Chinese market had long been a growth engine for luxury brands, ongoing challenges, including a struggling property market and high youth unemployment, have dampened demand.
As highlighted in the report, leading luxury groups are feeling the strain: LVMH reported a 4.4% dip in third-quarter sales, while Gucci's parent company, Kering, faced a 15% drop, citing China as a significant factor.
However, Grangie expressed that China’s economic slowdown is just one part of a more complex picture. He pointed to a "third factor" that may lengthen the downturn—a growing sense of "luxury fatigue" among consumers in mature markets, where people are beginning to question the value and meaning of high-end goods.
"This crisis will profoundly affect our business," Grangie said, emphasizing that consumers seem "tired of being bludgeoned by luxury." He noted that while luxury brands have weathered economic downturns before, this sense of fatigue represents a distinct shift in consumer sentiment.
According to the report, Grangie said Chanel’s privately held family company structure allows it to adopt a long-term view of market challenges. Unlike some competitors, Chanel has maintained a modest presence in China, with just 16 boutiques.
In the report, he highlighted that while the current crisis tests the luxury sector's resilience, Chanel's measured approach may provide it with greater stability through uncertain years ahead.
Learn more in this report in Barron's.