The Luxury Slowdown Explained in One Chart

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Gucci let go of Creative Director Frida Gianini in part, according to BoF, to “regain lost exclusivity.” The article speculated that a big part of the slowdown in sales was from China – its consumers seeking more exclusive brands like Chanel, Hermes. Indeed the flashy, gold, logo-driven image and product of Gucci is emblematic of new money, and new money in China is declining.

From the China Millionaire Wealth report, the rate of new millionaire growth in slowing – only up 3% in 2013, the slowest growth in five years. So the stock of new rich (crass rich or “Tuhao“) is declining. At the peak of the S&P Global Luxury Index, in 2013, new millionaires in China were down 50% vs. prior year. It looks like 2-3 years after your first million, you start buying other things – probably something boring like real estate.

The big global brands may find themselves too mainstream to appeal to the aristocratic, old 2013 money. This is pre-Alibaba IPO, so the the new millionaires may return, but for now it looks like tastes have become more discerning.

China Young Money


Year NEW Millionaries var % S&P Global Luxury Index Net TR var%
2011 70.00% -2.17%
2012 -29.41% 25.76%
2013 -50.00% 34.90%
2014 -88.89% -6.93%
Sources: S&P Dow Jones Indices LLC, Chinese Millionaire Wealth Report 2013

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