The Power of Quiet Luxury in the Modern Luxury Industry

TLDR; The luxury industry relies on the upper-middle class, not the 1%, to sustain its market valuation. The concept of 'quiet luxury' and the shift in consumer behavior post-pandemic have led to changes in the industry dynamics.

⌚ The Power of Luxury Conglomerates

Major luxury conglomerates like LVMH and Kering dominate the global luxury market, with brands like Louis Vuitton, Dior, and Gucci.

The upper-middle class, not the ultra-rich, comprises the primary clientele sustaining the industry's staggering market valuation of 397 billion dollars.

LVMH's Chief Financial Officer stated that most Louis Vuitton products are not sold to the super-rich but to people who have money and want to indulge themselves.

💰 Understanding Luxury

Luxury products are defined by their premium price point, exceptional craftsmanship, and their function as a symbol of wealth and distinction.

Luxury brands are categorized into Major League (e.g., Louis Vuitton, Gucci) and Minor League (e.g., Celine, Saint Laurent).

Quiet luxury, characterized by understated and obscure designs, challenges the typical style associated with wealthy groups.

👔 Preferences of the 1%

The 1% prefer select Minor League brands that offer quiet luxury, avoiding overtly flashy designs to convey a more subdued and understated sign value.

This preference reflects a cultural narrative where old money is associated with tradition and refinement, while new money is linked to a more brash display of wealth.

Luxury brands like Brunello Cucinelli, Loro Piana, and Celine capture the attention of the 1% due to their quiet luxury aesthetic.

🌍 The Role of the Middle Class

The middle class, comprising about 350 million people, is the lifeline of the modern-day fashion market, purchasing high-end luxury goods from Major League brands.

The middle class's significance lies in their financial flexibility to occasionally indulge in luxury without compromising their overall financial health.

The middle class's spending behavior significantly impacts the industry's market value and revenue, making them the perfect group to rely on for luxury brands.

📉 Post-Pandemic Challenges

The fashion industry has experienced a significant slowdown post-pandemic, with Major League brands like Gucci and creative brands in the Minor League facing underperformance in sales.

The middle class has reduced luxury spending and redirected more money into savings amid rising levels of inflation and a global cost-of-living crisis.

Quiet luxury brands like Brunello Cucinelli and Loro Piana continue to thrive, appealing to the billionaire population and reporting record earnings.

🛍️ Shifting Consumer Behavior

The concept of 'quiet luxury' has gained popularity, prompting people from all demographics to try to emulate the style.

Some in the middle class may be shifting their preferences towards 'quiet luxury,' leading to record sales for certain Minor League brands.

The potential resistance of this style among the uber-rich remains uncertain, raising questions about its future in the luxury industry.