Interesting Analysis Of Luxury Goods Market

[inadeje]

Rolex isn’t mentioned, but watches are. The 2021 vertiginous increase in luxury goods sales is pretty telling. Nothing that we on this forum aren’t completely aware of.

https://www.bloomberg.com/news/artic...nto-e-commerce

[Randy9999]

Interesting article. Quoting: "After surprisingly solid sales during the pandemic, European and U.S. luxury brands are feeling bullish heading into 2022. Sales of luxury goods are expected to grow as much as 25% next year compared with 2019, according to McKinsey & Co. That’s more than the flat to 5% increase the firm projects for the broader nonluxury fashion sector."

[HiBoost]

It feels like these luxury brands would be rooting for more covid variants and additional surges for years to come. I have to think the execs at any of these companies would be considering their biggest risk to be covid dissipating and the pendulum swinging in the other direction towards service spending. At some point the dinner conversations have to change from "What else am I going to spend money on right now?" to "Honey, you bought 8 watches during lockdown, can we please take a vacation??"

[mpatel1080]

Looks like most of the growth is coming from China....this is an ongoing trend as the upper middle class there is rapidly growing.

[Driver8]

Originally Posted by HiBoost

It feels like these luxury brands would be rooting for more covid variants and additional surges for years to come. I have to think the execs at any of these companies would be considering their biggest risk to be covid dissipating and the pendulum swinging in the other direction towards service spending. At some point the dinner conversations have to change from "What else am I going to spend money on right now?" to "Honey, you bought 8 watches during lockdown, can we please take a vacation??"

Good post that.

[inadeje]

Originally Posted by HiBoost

It feels like these luxury brands would be rooting for more covid variants and additional surges for years to come. I have to think the execs at any of these companies would be considering their biggest risk to be covid dissipating and the pendulum swinging in the other direction towards service spending. At some point the dinner conversations have to change from "What else am I going to spend money on right now?" to "Honey, you bought 8 watches during lockdown, can we please take a vacation??"

Excellent counterpoint and hugely overlooked by most. The spend on luxury items is directly associated to disposable income. As you say, the pendulum will swing sharply back, but will consumers splurge on things like travel for longer periods and more costly trips as a kind of vengeance for having missed numerous years of vacation? Thus stripping all or most disposable income, sending the luxury goods market into an unforeseen tailspin of the likes they’ve never experienced?

[nosignalbmwdriver]

Wonder what grey market will be with China running 100% by 2022

[Driver8]

Originally Posted by inadeje

Excellent counterpoint and hugely overlooked by most. The spend on luxury items is directly associated to disposable income. As you say, the pendulum will swing sharply back, but will consumers splurge on things like travel for longer periods and more costly trips as a kind of vengeance for having missed numerous years of vacation? Thus stripping all or most disposable income, sending the luxury goods market into an unforeseen tailspin of the likes they’ve never experienced?

It could definitely happen. The Rolex market is so overheated at the moment (with lots of "Joe Public"/non-WIS jumping on board expecting never-ending price rises), that it wouldn't take much of a percentage of disposable income to move to other things to start to undermine the crazy high prices. People who bought high in the hope of making a killing could find prices stall, so potentially prompting people to undercut others to sell quicker. If enough of that takes hold (in effect just another type of FOMO), you get panic selling and thus prices drop.

Too many variables to say when, how much, or even if, that will happen with any certainty...... but as I said in a thread last week, we're definitely in the "Greed"/"Delusion" stage, so who knows? Interesting times ahead, one way or another.

[HiBoost]

Originally Posted by Driver8

but as I said in a thread last week, we're definitely in the "Greed"/"Delusion" stage, so who knows?

No doubt. If an economist were to write an article on our little world the title might be "Rolex 2021: Peak Tulip?"

[inadeje]

Originally Posted by Driver8

It could definitely happen. The Rolex market is so overheated at the moment (with lots of "Joe Public"/non-WIS jumping on board expecting never-ending price rises), that it wouldn't take much of a percentage of disposable income to move to other things to start to undermine the crazy high prices. People who bought high in the hope of making a killing could find prices stall, so potentially prompting people to undercut others to sell quicker. If enough of that takes hold (in effect just another type of FOMO), you get panic selling and thus prices drop.

Too many variables to say when, how much, or even if, that will happen with any certainty...... but as I said in a thread last week, we're definitely in the "Greed"/"Delusion" stage, so who knows? Interesting times ahead, one way or another.

Yes, your viewpoint and analysis is spot on. One overlooked matter you’ve probably thought of too is the dealer to dealer FOMO that is underway. This unto itself is a kind of enormous price fixing machine. It won’t be pretty for some of these over extended and over leveraged greys when the music ultimately stops…