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According to reports, around 50 million consumers have either opted out or been forced out of the luxury market in recent years. European luxury giants such as LVMH, Kering (which owns Gucci), Moncler, and Burberry have reported significant losses in market value, with LVMH marking its worst performance since the global financial crisis.
Understanding the Disconnect: Economic Factors
The primary catalyst for this decline is China's economic slowdown, closely linked to a slump in the property market. For many consumers in China, particularly from the middle class, real estate has historically been perceived as a reliable avenue for wealth accumulation. With the property crisis eroding household wealth, consumer confidence has waned, leading to a notable shift in spending behavior.