Case Study

Selling Luxury
to the 1%
By Tamison O’Connor The ultra-wealthy are spending more on luxury than ever before — and,
January 2024
amid a broader market slowdown, winning them over is becoming a
competitive battleground for brands. BoF breaks down how strategies
from Gucci, Mytheresa and Tiffany & Co. are successfully building closer
relationships with top clients: using private stores, crafting exclusive
experiences and launching one-of-a-kind, personalised products to foster
greater loyalty among VICs and increase their spending in the long term.

businessoffashion.com
Executive Summary
Since the world emerged from 2020’s coronavirus inviting clients to commission bespoke pieces from
lockdowns, spending on luxury goods has gone chief artistic officer Nathalie Verdeille at its newly
into overdrive. This spelled good news for high- renovated experiential flagship in New York.
end brands, which experienced explosive growth
These strategies offer valuable lessons on how
fuelled by stimulus packages, deferred student loan
cultivating personal relationships and crafting
schemes and fewer opportunities to spend money on
memorable experiences for shoppers can foster
experiences.
an emotional connection to brands, helping them
But during 2023, aspirational consumers hit by the to stand out among competitors and build loyalty
rising cost of living finally sobered up. As growth of among luxury’s most sought-after customers.
the broader luxury market slows, attracting the top
1 percent of earners, whose well-padded budgets are
more insulated from global uncertainty, will be key
to driving sales. Already, courting “VICs” — very
important clients — has become a strategic focus for
brands. However, engaging this consumer cohort is
only becoming more challenging, as competition for
their attention intensifies. The dynamic is pushing
retailers and megabrands to implement more
sophisticated, differentiated strategies to foster
relationships.
This case study will examine strategies adopted by
Gucci, Mytheresa and Tiffany & Co. that are designed
to build closer relationships with top clients, foster
greater loyalty and increase their spending in the
long term.
Gucci opened its first by-appointment store
exclusively for servicing the brand’s most important
clients in Los Angeles, dubbed “Gucci Salon.” Here,
the brand’s most exclusive product ranges are on
display, while each appointment is carefully tailored
to the needs and desires of each customer. The brand
has replicated the concept with dedicated private
floors at flagship stores in London and Tokyo.
Mytheresa ratcheted up its calendar of elaborate
events (often hosted in collaboration with its clients’
favourite brands) offering exclusive access that
money alone can’t facilitate: from intimate dinners at
designers’ private residences to starry, insider-only
shows and parties.
Meanwhile, Tiffany & Co. has rapidly expanded
its ultra-exclusive high jewellery division, with
a particular emphasis on personalisation. This
includes sourcing unrivalled gemstones and

Disclosure: Tiffany & Co. parent company LVMH is part of a group of investors who,
together, hold a minority interest in The Business of Fashion. All investors have signed
shareholders’ documentation guaranteeing BoF’s complete editorial independence.

Have you been sent this case study? Read more deep-dive analysis with a BoF Professional membership at businessoffashion.com/
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Market Opportunity

Luxury’s Most Sought-After Shoppers

Top-tier brands more heavily exposed to wealthier customers, like Hermès, are thriving amid a broader slowdown in the luxury market. Getty Images.

Exhibit 1: Strong Recovery In the aftermath of 2020’s coronavirus

pandemic, the luxury industry
In the aftermath of the pandemic, the market for personal luxury goods surged to
experienced a phenomenal rebound,
record highs.
buoyed by a “YOLO” (You Only Live Once)
attitude among consumers wanting to
Personal luxury goods market (2018–2023) make the most of post-lockdown freedom.
EUR (billions) Despite slowing GDP growth, rapid inflation,
a global energy crisis and record lows in
+38% consumer confidence, in 2022 global sales
2018 vs. 2023
of luxury goods surged to a record €349
362 billion ($380 billion), up 20 percent from
349
the year before and up 24 percent from
2019’s pre-pandemic levels, according to
281 290 consultancy Bain & Company.
262
But by 2023, the luxury sector’s explosive
220
post-pandemic growth spurt began
to moderate — particularly in the US,
where aspirational shoppers significantly
pulled back amid rising interest rates and
the end of Covid-era stimulus cheques.
Industry growth slowed dramatically to
just 4 percent year on year in 2023.
Despite the slowdown, top-tier brands
more heavily exposed to wealthier
customers — like Chanel, Hermès and
Brunello Cucinelli — have continued to
2018 2019 2020 2021 2022 2023 report pacey growth figures. Increasingly,
luxury sales are being buoyed by a smaller
pool of uber-wealthy shoppers gravitating
Source: Bain & Company

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Market Opportunity

Exhibit 2: A Sector Driven by the Few

A small pool of ultra-wealthy clients accounts for a significant portion of global luxury sales.

~2%
of customers drove

~40%
of luxury sales in 2022

Source: Bain & Company

towards more expensive purchases

— and brands that have the greatest
exposure to top-tier clients have been the
beneficiaries.
In 2022, the top 2 percent of luxury
customers drove 40 percent of overall
sales, according to Bain. The market
share driven by VICs increased further
in 2023, the consultancy estimates, with
growth spurred by increased sales of
higher-ticket items and price hikes rather
than greater overall volumes, indicating
that demand for product categories at the
top of the luxury pyramid boomed.
“Most people have concluded that it is a
better idea to enjoy life, rather than die
rich. Discretionary spend — not just on
luxury goods — has gone up significantly
relative to pre-pandemic levels,”
Bernstein analyst Luca Solca said in a
note to clients. “The richer the consumer,
the higher the spend now [versus] pre-
pandemic levels.”
Ultimately, the world’s super wealthy
are more insulated from economic
uncertainty and less sensitive to the
dramatic price hikes implemented by
luxury brands in recent years. Engaging
and retaining top clients will remain
critical to brands that want to continue
to flourish amid the broader market
slowdown.

Brands like Gucci are leaning into exclusive, high-ticket product categories such as high jewellery. Gucci.

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 Market Opportunity

Exhibit 3: VICs Hike Spending

Wealthy consumers are spending more on luxury than ever. The richer the consumer, the higher the spend now compared with before the pandemic.

Europe duty free shopping spend (2019 vs. 2022)

EUR 2019 average spend 2022 average spend

2022 shopper spend segment

52,300
>70k 2.6x
134,800

22,400
VICs 40k–70k 2.3x
51,600

13,100
20k–40k 2.1x
27,400

7,500
10k–20k 1.8x
13,800

4,600
5k–10k 1.5x
7,000

3,100
3k–5k 1.3x
3,900

2,000
1k–3k 0.9x
1,800

1,000
< 1k 0.4x
420

Source: Global Blue, Bernstein

“It’s easy [for them to] buy Battling for the Most Difficult-to- In addition, the pandemic only pushed
Reach Customer customer expectations to new heights.
products; it’s more difficult to Engaging this consumer cohort, however,
During the pandemic, with stores closed
and many social occasions on hold,
convince them to spend some has only become more challenging.
luxury brands had to work much harder
“There’s a war for their share of attention,”
time with you.” said Claudia D’Arpizio, partner at Bain
to engage their loyal customers and
drive sales, raising the bar for the kind
& Company, who noted that labels
— Claudia D’Arpizio, Bain of service big spenders expect. Crafting
have ramped up invites to events, from
differentiated experiences and products
personal shopping sessions and dedicated
for top customers is key to remaining
fashion shows to dinners and parties. In
exclusive and interesting.
addition to competition among brands,
fashion has to compete for attention As consumers become more used to
with luxury companies across adjacent luxury treatment, businesses will have to
industries, like art and design, travel and cope with the rising cost of keeping clients
hospitality, cars and private jets. engaged, facing pressure to ratchet up
targeted services for top-tier shoppers,
“[Ultra-high-net-worth consumers] are
while also investing in communication to
more short on time than money. It’s easy
the wider world.
[for them to] buy products; it’s more
difficult to convince them to spend some
time with you,” she said.

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Strategy

Elevation, Experience, Emotion

01 — Invitation-Only Stores: Inside Gucci’s ‘Salon’

The Gucci Salon on Melrose Avenue in Los Angeles is an invitation-only store. Gucci.

In April 2023, Gucci opened a new Los been restored by Gucci artisans in-house. Since opening the stand-alone location
Angeles location on Melrose Avenue. An Meanwhile, tinted windows guarantee in Los Angeles, the brand has also rolled
impressive 4,380-square-foot corner total privacy. out the Gucci Salon concept in London
store just a stone’s throw away from peers and Tokyo, with dedicated Gucci Salon
For Gucci, the invitation-only retail
like Bottega Veneta, Chloé and The Row, suites at flagship stores. The brand also
concept is part of a broader turnaround
the interior is peppered with references hosts special events in other key markets,
plan to upscale the brand after a
to old Hollywood glamour, with art-deco replicating the Salon experience for a
prolonged period of stagnant sales.
chandeliers, plush velvet drapes and gold- few days. More permanent locations are
Courting luxury’s wealthiest consumers
painted antique Chinese cabinets. expected to follow in key cities globally.
is a key strategic focus, with the label
But unlike a regular store, members of launching a high jewellery collection, Internally at Gucci, Salon is viewed as a
the public can’t just walk in and browse. releasing more elevated, higher-priced way to communicate the brand’s most
Gucci’s Melrose location operates by ready-to-wear and bags, and opening elevated offering: rather than just a
appointment only, exclusively reserved private shopping spaces for top clients. private physical space, the combination
for servicing the brand’s most important of high-end product assortment and
“Salon is really to recruit very, very high-
clients. personalised client experience is what
end customers at Gucci,” Kering chief
makes the concept work. In the US, VIP
Here, Gucci’s most exclusive — and executive François-Henri Pinault told
clients from all over the country come
expensive — products take centre stage: analysts ahead of the store opening. “We
to visit the Melrose Salon, leading to a
made-to-order collections crafted from are offering … very high-level products
“notable increase in client spending at
precious skins; accessories embellished above €40,000 or €50,000 that can
their home store,” according to the brand.
with crystals, diamonds or 18-carat gold; go through some million euros in high
high jewellery pieces; one-of-a-kind jewellery. … This is part of the strategy of Swiss watchmaker Audemars Piguet has
gowns; and rare vintage finds that have elevating the brand.” rolled out a similar concept dubbed “AP

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Strategy

House” — where clients spend three to negronis, which are heat pressed with transaction-led. Gucci’s Bond Street Salon
four times as much as they would in a Gucci’s Kingsnake insignia, and food has hosted themed events for top clients,
traditional store — as have Chanel and menus, which are personalised with each such as “tailoring and whisky tasting,” to
Brunello Cucinelli. guest’s name. Meanwhile, the space itself showcase the brand’s made-to-measure
is fully customisable, with free-standing suiting services.
A Home Away From Home fittings and furniture that can easily be
“The relationship must be emotional:
adapted depending on the needs of the
Gucci Salons look and feel more like that’s the primary element, which we
client or type of event being hosted.
five-star apartments than retail stores. prioritise above all,” said Maurizio
In London’s Bond Street, the interior is Clients can spend as much time at the Pisanu, Gucci’s managing director of
decorated with a plush cream carpet, Salon as they like, with appointments watches and jewellery and global director
contemporary furniture pieces and lasting anywhere from a couple of hours of high end, lifestyle and décor. “Clients
artwork by the likes of Lucio Fontana. to a full day. Ahead of a visit, Salon staff should cherish this experience. Sales are a
Private butlers are on hand to offer guests will often confer with a client’s go-to consequence.”
canapés and cocktails. Some clients Gucci store associate or personal shopper
may make use of the brand’s limousine to anticipate client needs and curate a Supercharge Spending With a
chauffeur service to transport them to product display especially for them. The Personal Touch
and from the appointment. Others might set up is designed to create an intimate
A regular Gucci store may see hundreds of
stay for lunch, enjoying dishes curated by and memorable experience around each
shoppers wander in throughout the day.
famed chef Massimo Bottura of the Gucci client’s interaction with the Gucci brand.
But more than ever before, VICs respond
Osteria restaurants.
While product plays a key role in the to more intimate, tailored experiences.
There’s acute attention to detail, right Salon strategy, the spaces themselves are
“What [the luxury industry] realised
down to the ice cubes served in the intended to be experience-led rather than
over Covid is: if you have this one-on-one
shopping experience, if you are a VIC or
a potential VIC, your spend is going to be
so much higher,” said New York-based
luxury consultant Robert Burke.
At Gucci Salons, the retail economics
are already favourable: more expensive
merchandise leads to greater retail
productivity. Clients visiting the Salon
are typically interested in Gucci’s
top-end products, whether that be a
$50,000 Diana tote bag in crocodile or a
multi-million dollar necklace made from
yellow sapphires, pink tourmalines and
mandarin garnets. Factor in the intimacy
of a one-on-one appointment, where
product on display is curated towards the
client’s own lifestyle and personal tastes,
and the potential spend increases even
further.
“Sometimes, clients come in with a
specific idea for one product they want to
buy, and they leave the appointment with
four or five different items. But that’s the
beauty of this special moment — it’s truly
tailor-made to meet the clients’ needs,”
said Pisanu.
Exceptional customer service has become
table stakes for luxury brands if they’re
going to win in today’s retail environment
— and when it comes to selling goods with
five- or six-figure price tags, articulating
to customers why these products are
so special is an important part of that
service.
Internally, Gucci has built out a
dedicated training programme, which
includes visiting the brand’s production
hubs in Italy and watchmaking site in
Switzerland, and requires passing exams.
The aim is to bolster Salon staff expertise
around the brand’s top-end products,
from precious skins to haute horology and
At the Gucci Salon on Melrose Avenue, clients will find one-of-a-kind gowns and rare vintage pieces that have been high jewellery.
restored by Gucci artisans in-house. Gucci.

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Strategy

02 — Ultra-Exclusive Experiences: Mytheresa’s Events Strategy

A three-day trip to Portofino in collaboration with Dolce & Gabbana was just one of the 25 events Mytheresa hosted for its top-spending customers in 2023. Getty Images.

In 2022, Brunello Cucinelli celebrated Mytheresa’s managing director and chief of a trip, said May, as they want to outfit
his birthday with a party at his personal customer experience officer. “It is very themselves especially for the occasion.
home in Solomeo, Umbria, with a guest human what we are doing, and that is
list mainly comprising friends and family important.” Exclusive Access
of the designer, known for creating
The approach has helped Mytheresa to Some of Mytheresa’s events are
four-figure cashmere sweaters and
remain resilient and even grow in an blockbuster extravaganzas, like a three-
elegant tailoring. But there were also
extremely challenging environment for day affair on the Italian Riviera hosted
30 attendees the designer didn’t know:
multi-brand retailers. To be sure, the in collaboration with Dolce & Gabbana
their invitations came courtesy of luxury
company has taken a hit amid the broader in May 2023, when 35 of Mytheresa’s
e-tailer Mytheresa, a Cucinelli stockist
market slowdown, with growth slowing top customers joined fashion media,
known for staging lavish, memorable
and profits narrowing in 2023. Yet peers designers and celebrities for a special
events for top spenders on its site.
Farfetch, Net-a-Porter and Matches faced fashion show in Portofino’s main
For Munich-based Mytheresa, facilitating much larger hurdles in the same period, piazza. Afterwards they dined alfresco
insider access for its top spending clients continuing to accrue significant losses overlooking the marina beneath a
— often packaged as part of an elaborate and, in the case of Farfetch, teetering on fireworks display.
multi-day trip, where they might meet the brink of collapse.
Others are private events that cater to
designers, mingle with celebrities or
In any given year, Mytheresa will host as the company’s more under-the-radar
tour facilities usually closed to the
many as 25 events catering to its top- clientele, where press are left off the invite
public — has become a key pillar of its
tier customers, often co-hosted with list and neither the brand nor Mytheresa
business model. The strategy is geared
one of the brands stocked on its website. post about the event on social media
toward forging closer ties with top-tier
Events typically take three months (Cucinelli’s birthday party, for example).
customers, who typically spend six (or
to plan, said May, and are organised
more) figures with the e-tailer annually What all events have in common is a focus
entirely by Mytheresa’s in-house team in
and drive almost 40 percent of its overall on intimate experiences involving an
collaboration with the partner brand.
business, according to the company. element of exclusive access that wealth
While the aim of the strategy is primarily alone can’t wrangle. In Portofino, for
“If you think about yourself, when
to engage and retain Mytheresa’s most example, Mytheresa guests were invited
you travel with people, when you have
valuable customers, each event also for cocktails at the private residence
dinner with people, you have a different
creates a major shopping opportunity. of Stefano Gabbana, Villa Olivetta, the
connection,” explained Isabel May,
Often a guest’s spending will surge ahead day before the fashion show. During a

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Strategy

November 2023 trip to Vienna hosted atelier in Paris, where many of Audrey ‘money can’t buy,’ because our customers
in collaboration with Miu Miu, clients Hepburn’s “Breakfast at Tiffany’s” are so busy,” said May. “We cannot just
enjoyed a rare private dining experience costumes are kept, before dining by do a lunch. There needs to be something
at the Upper Belvedere palace where candlelight with then-creative director around it that we create.”
Gustav Klimt’s “Kiss” is displayed. Matthew Williams in the auditorium of
While events themselves typically last
the historic Théâtre des Variétés.
Later in the month, clients were treated to two or three days, the Mytheresa team
a private tour of Givenchy’s Salon Couture “There always needs to be an element of works to draw out the experience for
each client. Ahead of a trip, either May
or chief executive Michael Kliger will
write a personal note to each attendee,
while their personal shopper will provide
them with more information about the
area they’re travelling to. After the trip,
the team will follow up by sending them
a flower arrangement as a thank you for
attending. Three weeks later, they’ll
receive a gift from the co-hosting brand,
along with a silver-framed picture of
them from the event, perhaps posing
with a creative director or the Mytheresa
leadership team, to keep as a memento of
the trip.

Fostering Community, Creating

Memories
Each Mytheresa VIC has their own
personal shopper at the company, who
may sometimes join them at the event.
This helps clients form a more personal
bond with their main touchpoint at
Mytheresa, said May. May and Kliger
also attend events, giving them the
opportunity to connect directly with
customers.
“Having two days with a customer brings
it to an ultimate relationship, which is
an emotional tie. And, as we’re selling
luxury, an emotional tie is very valuable,”
she said.
Not only are these events critical
moments for Mytheresa to deepen its
relationship with its clients; they’re also
an opportunity for clients to connect with
one another, said May.
Carefully considered invite lists aim
to bring together a mix of clients from
different nationalities and geographies
who are existing or potential future fans
of the brand co-hosting the event. The
company also considers who is likely to
hit it off with one another. “It’s pretty
much like you would do invites for your
own parties. It’s very curated,” May said.
Offering networking opportunities brings
added value to clients, who are taking
time out of a busy schedule to attend
the trip, as well as fostering a sense of
community around Mytheresa. Bain’s
D’Arpizio describes community as “a very
powerful tool” for luxury brands when
done well.
“We have people who became friends, we
have people who made businesses out of
these meetings,” May said. “It is really
Mytheresa clients have enjoyed a rare private evening at Vienna’s Upper Belvedere palace where Gustav Klimt’s “Kiss” like a community, or kind of a club.”
is displayed (top), and dined with the creative directors of their favourite brands (bottom). Mytheresa.

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Strategy

03 — One-of-a-Kind Products: Tiffany & Co.’s High Jewellery Focus

Tiffany & Co. is betting on the sparkle

of rare diamonds, sapphires and
tourmalines to woo wealthy clients and
power its next phase of growth.
In 2023, the New York house stepped up
investments in high jewellery, pushing
the rarity and quality of products to new
heights in a bigger-than-ever edition of its
annual “Blue Book” collection, in which
each piece is one-of-a-kind. The brand
also acquired a group of five specialist
manufacturers as it prepares to further
grow the category.
The changes coincided with the
reopening of the brand’s Fifth Avenue
flagship store — or “the Landmark” as it’s
dubbed internally — after a multi-year
renovation. Now, the location includes an
exclusive VIP-only penthouse shopping
suite on the 10th floor of the building
— complete with a private dining room
and sweeping views over Central Park —
where Tiffany’s most valued and highest-
spending customers can commission and
co-design personalised pieces.
The shifts “really took us to another
level of elevation and ability to connect
with these really top clients of ours,” said
Victoria Reynolds, chief gemologist and
vice president of high jewellery diamond
and gemstone acquisition at Tiffany. “A
lot of this is about being able to have a
client experience something, whether it’s
making a piece of incredible jewellery,
whether it’s showcasing the finest
gemstones in the world.”
The strategy is part of a broader brand
elevation play aimed at restoring
the faded jewellery house’s sparkle,
spearheaded by new owner LVMH,
which purchased the company for $16
billion in 2021. While Tiffany has been Tiffany’s “Out of the Blue” high jewellery collection was made exclusively with unenhanced stones, including opals,
making high jewellery for over 180 years, padparadscha, Umba sapphires and tanzanites. Tiffany & Co.
in recent decades the brand has become
best-known among consumers for its end brand positionings. Gucci entered the use of enhanced stones, a process where
silver designs, like its entry-level “Return category in 2019 as part of its own push heat is applied to gems like rubies and
to Tiffany” pendants. Now, the house is upmarket. sapphires to boost and standardise their
betting that renewing its focus on the colour and clarity. Slight variations in the
At Tiffany, top clients are already taking
top end will help boost the perceived untreated stones now help to underscore
the bait: In a June 2023 interview with
exclusivity of the brand — particularly how each is one-of-a-kind. The brand has
BoF, chief executive Anthony Ledru said
among its wealthiest clientele, who are also increased its sourcing of extremely
the company had grown its high jewellery
increasingly prioritising unique and rare stones — or what Reynolds describes
business by 300 percent since the LVMH
special purchases. as “once-in-a-lifetime acquisitions.”
acquisition, achieving “hundreds of
With very few brands operating in the millions in additional sales.” Sterling In 2023, this included the acquisition
high jewellery space — where products silver, meanwhile, is now estimated to of a 10-carat emerald that is fissure and
are unique, made with the highest-quality account for less than 15 percent of total inclusion free, from Colombia’s Muzo
gemstones and precious metals — the sales, down from levels of around one mines; and the purchase of a 71-carat
category is seen as an effective way to quarter pre-acquisition, according to fancy vivid yellow rough diamond, from
consolidate a brand’s high-end appeal. HSBC estimates. the Ekati Diamond Mine in Canada.
Dior and Chanel, too, have ramped up
“These kinds of acquisitions are really
investments in the segment, with the The Rarest Stones part of what we’re going to continue to
aim of reinforcing ties to their wealthiest
To push its one-off creations further do,” said Reynolds. “Our clients will come
customers while also anchoring their top-
upmarket, Tiffany has phased out the to us, knowing that we’re going to be

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Strategy

procuring the most exceptional coloured

gemstones and diamonds in the world.”
The strategy was demonstrated publicly
to clients via its 2023 “Blue Book” high
jewellery collection, which was made
exclusively with unenhanced stones,
including opals, padparadscha, Umba
sapphires and tanzanites. Titled “Out
of the Blue,” it was the house’s first
collection designed by chief artistic officer
Nathalie Verdeille, a former Cartier
designer who joined the house in 2021.
The designs themselves were inspired
by aquatic-themed works of Jean
Schlumberger, the house’s famed
jewellery designer during the mid-20th
century, beloved by royalty and movie
stars like Elizabeth Taylor and Audrey
Hepburn. Prices for the intricate pieces
started at $100,000, going up to seven
figures for more elaborate works.
To boost its manufacturing capacity
and capabilities, in 2023 Tiffany also
purchased a majority stake in Platinum
Invest Group, a France-based jewellery
manufacturing company that owns five
workshops, including the renowned Orest
and Abysse ateliers.

Co-Creating a One-of-a-Kind
Piece
A big opportunity for Tiffany is
personalised, bespoke pieces, which
create a more intimate experience around
the product and deepen the emotional tie
of the customer to the brand.
Since opening the new flagship in
New York, Tiffany has been able to
“significantly” dial up the number of In 2023, Tiffany reopened its “Landmark” flagship store on New York City’s Fifth Avenue (top), which includes an
custom design opportunities for clients, exclusive VIP-only penthouse shopping suite on the 10th floor of the building (bottom). Tiffany & Co.
said Reynolds. Before purchasing
their stones, clients can have an initial more about how each stone is formed watch their design being created on site.
consultation with Reynolds in the private and its precise composition, while others
“Having this experience in one building
shopping suite, before sitting down with prefer the design process itself, and want
really makes for something that is once in
artistic director Verdeille and her team to to spend more time with Verdeille, said
a lifetime,” said Reynolds. “It allows the
translate a client’s ideas into a design. Reynolds.
client to pick and choose the thing that’s
Each consultation is tailored to suit As part of the process, clients can tour the most important to them. The end result in
the client’s own needs: some enjoy high jewellery workshop located on the high jewellery [is always] a wearable piece
learning about the gemological aspects to seventh floor of the flagship, where they of art.”
designing a piece, wanting to understand can speak with the brand’s artisans or

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Takeaways and Market Outlook
Exhibit 4: Higher Barriers to Entry
Luxury brands across the sector have raised prices dramatically, which risks alienating aspirational luxury consumers.

Luxury goods sector like-for-like price increases (2016–2024E) Price (2019–2022) Medium Lady Dior bag
% USD Medium Chanel Flap bag

+8
+51.72%
2019–2022

+32.58%
8,800
2019–2022
+6
7,800

+5
6,500
5,800 5,900
+4 5,200
4,900
4,450
+3

+2

+1 +1 +1

2016 2017 2018 2019 2020 2021 2022 2023 2024E 2019 2020 2021 2022

Source: UBS Research Source: The Fashion Law, Fashionphile

When brands are executing plans to a client for a special dinner after a day increased focus on top-tier clients, could
engage top clients, emotion has to be at of shopping at the Bond Street Salon, alienate entry-level luxury customers.
the heart of the strategy. The brand-client Mytheresa jetting VICs off to Capri for a Engaging the biggest spenders must
relationship can’t be transactional, it weekend away with the creative director continue to be a priority, but alongside
has to be personal; the element of human of Pucci, or Tiffany’s artistic director this, brands also have to reignite desire
touch is critical, as is the ability for a Nathalie Verdeille sketching designs for among aspirational clients, said Bain’s
brand to demonstrate they know the a one-of-a-kind bespoke necklace over D’Arpizio. If they don’t, it could dampen
customer like a friend. coffee with a client. growth prospects when the broader
market picks up pace again.
Private client strategies can drive high The wealthiest clients, who still have
levels of conversion. But while top- money to spend amid macroeconomic
end product plays an important role, turbulence, will remain extremely
strategies shouldn’t feel too sales-driven. important to luxury brands in 2024, as
Gucci, Mytheresa and Tiffany each spoke the sector’s outlook remains challenging.
about how these interactions nurture Deutsche Bank analysts expect a mild
the relationship, with the understanding recession in the US and continued
that if the bond is there, sales will stagnant growth in Europe will continue
follow. Uniqueness is crucial, from to drag on the market; the bank forecasts
both a product standpoint and a service the sector will grow 6 percent this year.
standpoint. It’s easy for this customer to
Brands should be careful, however, not
buy products — what is valuable is access
to neglect the rest of their customer base,
to what money alone can’t facilitate.
which, after all, still drive a majority
Creating memorable experiences is of market sales. Dramatic price hikes
essential, whether that be Gucci hosting since the pandemic, combined with an

businessoffashion.com 12
Further Reading
• The Business of Fashion, Can Luxury Brands Grow in 2024?
• The Business of Fashion, Luxury Shoppers Are Sobering Up but It’s Not All Bad News
• The Business of Fashion, What’s Next for Tiffany Under LVMH
• The Business of Fashion, Tiffany, Dior: Understanding the New Model for Luxury Flagships
• The Business of Fashion, How Luxury Brands Court the 1 Percent
• The Business of Fashion, The One Luxury E-Commerce Player That’s Consistently Made Money

businessoffashion.com 13
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Front cover image: Gucci Salon on Melrose Avenue. Courtesy of Gucci.

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