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LVMH, the world leader in the luxury sector, saw
its sales jump 26% in first half of 2012.
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Richemont’s (Cartier, Montblanc, Van Cleef &
Arpels and Jaeger-LeCoultre) operating income has increased by 20% during the
second half closed on September 30.
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The Italian Prada has announced an increase in
its profit by 36.5% in the first half of 2012 (37.3% in Europe).
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The luxury division of PPR, the other French
sector, saw its sales increase by 30.7% in the first half of 2012.
These results were clearly in contrast with the decline recorded
by other industries. The luxury good industry seems to have fly through the
crisis recording the highest growth in the sector. A paradox that the media talked
about a lot, providing three main explanations to the phenomenon:
1.
The rising inequalities partially explain the
diagnosis.
2.
Such results also come from the larger middle-classes.
They were the ones who were really affected by the crisis and had to tighten
the belt on necessary and common products, thus increasing their frustration.
They would then spend in luxury product in order to free themselves from
frustration and as both an aspirational and a status symbol!
3. Increasing prices of luxury goods during the
crisis helped increase both sales and revenue. The price of Burberry gabardine
raincoat has been multiplied by 5.6 and the price of a Rolex Yach-Master rose
from 5 488 to 39 100 euros. Those increases in prices simply indicates the
strong and growing willingness to pay of the richest for whom price is no more
than a differentiation criterion and desirability. “the more expensive the more
desirable”!
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