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LVMH Q1 revenue shows continued luxury sector growth
A publication of It's A Working Title LLC
This weekly publication focuses on how business and economics trends, technology, and the drive for sustainability impact the global luxury, fashion, and experience economy industries. Prepared by the staff of content strategy agency and think tank It’s a Working Title LLC, each issue provides coverage and analysis of forces and events that shape the B2B and strategy landscape for fashion and luxury.
LVMH Q1 revenue shows continued luxury sector growth
LVMH reported massive Q1 consensus-busting revenue numbers this week, showing the persistent demand for luxury retail goods and services despite macroeconomic headwinds. Organic revenue was up 17% (y/y) with broad-based regional growth across Europe (up 24% y/y) and Asia (up 14% y/y) while North America grew 8%. By product type, every business line contributed to organic growth with the biggest gains in retailing (28%), fashion & leather (18%), beauty (11%), and watches & jewelry (11%).
LVMH is the largest luxury conglomerate in the world with revenues roughly equal to that of the combined revenues of its six closest competitors (Kering, Chanel, Richemont, Hermès, Capri Holdings, and Prada Group). Its share price ($LVMHF) hit a record this past week, reaching a market capitalization of $480 billion, leapfrogging Visa and Exxon Mobil.
U.S. luxury sales boom continues while mid- to lower-price fashion declines
Advance estimates of U.S. retail and food services sales for March 2023, released by the Commerce Department on April 14, showed a sharp decline in fashion and clothing sales.
Compared to the same period last year, clothing and clothing accessories were -1.8 percent as compared to 3.4 percent in February. After a couple of months of solid sales, department store sales fell by 1.2 percent in March. These data point to the weakness of fashion sales at the mid- and lower-price segments of the market while higher price points continue to surge with LVMH reporting Q1 organic revenue growth of 17 percent globally and 8 percent in the U.S.
The retail sales data are adjusted for seasonal variation and holiday and trading-day differences, but not for price.
Gucci and Vans launch Roblox cross-ecosystem collaboration
When gamification meets content strategy, you get cool cross-world activations like the Gucci Continuum x Vans World collaboration in Roblox.
It’s a super fun, interactive way to make the metaverse more than just social or dynamic content. The collaboration includes a cross-ecosystem scavenger hunt that encourages discoverability and is well designed with relatively easy-to-find clues (HINT: look for smoke). There’s even a nod to sustainability with the option to recycle items for new avatar wearables.
Gucci leading the way again and showing the potentialities for brand storytelling and engaging customer experience in a metaverse retail space.
The metaverse is not dead for brand marketers
According the The Wall Street Journal, brands and marketers are continuing to invest in building metaverse experiences even while many are publicly saying they’re shifting to AI.
So, what’s going on?
The stats are interesting:
46% of consumer brand marketers say they will increase their metaverse budgets this year with only 12% say they will spend less (Forrester).
51% of marketers named AI as their biggest tech investment priority, compared with 8% who placed the metaverse at the top of the list (Advanis for Sitecore).
But, Coffee notes that “campaigns’ potential value can outweigh their modest price tags, even when they are less effective than envisaged.”
For instance, Shiseido's "NARS Cosmetics Color Quest,” a Roblox experience attracted 41.9 million visitors while it was active from July to October of last year. Also, in 2021, consumers spent an average of six to seven minutes playing a series of Nars-sponsored games on fashion gaming app DREST.
For marketers, the metaverse continues to be about:
Raising brand awareness
Improving consumer brand perceptions
Gathering data on consumer needs and preferences in the metaverse
Whether you're talking bricks-and-mortar retail, web2, web2.5, web3, gaming, the metaverse, or something else, building meaningful consumer experiences comes down to defining and understanding your audiences and finding that happy place where brand vision meets consumer needs.
(Oh and you need content strategy to ensure that your content and messaging are authentic, channel-appropriate, and consumer-targeted.)
The new consumer retail KPIs: innovation and joy
What do consumers crave in a time of economic uncertainty now that the era of post-pandemic revenge shopping and replenishment are coming to an end?
The answer? Innovation and joy, says Kristen Classi-Zummo of Circana for Forbes.
She cites the beauty industry as an example of success with brands clearly creating smart, emotional connections with consumers. Some interesting stats:
Prestige beauty products grew by 15% in U.S. sales revenue in 2022, making it the fastest-growing industry across the $3 trillion in U.S. consumer spending (Circana)
Over 50% of consumers report that “makeup makes me feel confident,” while nearly 30% say that “makeup brings me joy.” (Circana 2022 Makeup Consumer Report)
Defining what “innovation” and “joy” mean and how to apply them in a practical sense is the real challenge for fashion and luxury retail.
As Classi-Zummo notes, “While leaning into newness is crucial, innovation has multiple meanings as it is uniquely dependent on the brand’s core consumers and their end goals.”
We love the idea of brand strategy built around the twin goals of innovation and joy.
For me, this is where the future of fashion and, frankly, strategy itself lie: harnessing a synergy between technology and emotional connection.
What else do we want from fashion if not something novel and interesting that makes us happy?
Twitter declines, micro-communities grow
As Elon Musk continues to turn Twitter into a live personal social experiment, the power of micro-communities to grow.
Before you say “ick” to Mastodon, here is a brief story:
In November, our team set up FashionSociall, the first dedicated fashion and luxury instance on Mastodon. We had a nice buzz going for a while when Twitter was first going off the rails when Elon took over. Journalist Christina Binkley even wrote us up in Vogue Business.
After an initial major uptake in new users, we’ve leveled off at a small but tight-knit group of over 100 users. We come from all parts of fashion: there are designers, writers, photographers, business leaders, and amateurs alike. We chat. We share ideas. We have deep discussions and spar on the issues of the day, whether that be the current state of fashion branding, inclusivity, sustainability, web3, sustainability, fashion history, or something else.
Some of us drift in and out. Others post regularly.
There’s no judgement and no expectations. It’s organic, even wild at times. There’s no algorithm to pre-seed topics of interest or trends. Everything is user driven and authentic in its purest form.
At Fashion Social, the experience is always honest, supportive, and deeply fashion focused. It’s a community we value and find ourselves coming back to day after day.
This is the power of microcommunity.
Want to know what drives GenZ shoppers? Tune into TikTok.
Want to know what drives a specific subset of consumers with a core interest in fashion and luxury? Come check out FashionSocial.host on Mastodon.
For brands, opportunities for user research are everywhere.
For individuals, opportunities to connect and network with like-minded people in a focused community also are everywhere.
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