Luxury is one of the jewels of European industry. Often deprecated, it employs hundreds of thousands of employees and supports tens of thousands of small and medium-sized businesses. It represents a major source of growth for the old continent, and one of the last sectors in which neither America nor Asia has so far managed to rival Europe. What lessons can we learn from this success?
The news just slipped in: according to the American magazine “Forbes”, the richest man and woman in the world became, for the first time in history, French. Bernard Arnault, CEO of the world’s leading luxury group LVMH, and Françoise Bettencourt-Meyers, CEO of L’Oréal. Their combined wealth amounts to 291.5 billion euros.
This result underscores the excellent health of the luxury sector, which is well ahead of the automotive and high-tech industries. In France, luxury groups have overtaken the market value of historic companies such as Total or Renault.
In Italy, even if the collections are far from such a size, we find the largest production sector of clothing and accessories in the world, and the largest number of luxury brands with a turnover of 1 billion euros or more. In France as in Italy, the luxury sector has become over the years one of the most important assets of the economic system.
These two countries account for two-thirds of the global luxury market. They have the biggest names on the planet. The two countries are directly and intrinsically linked by a similar culture, knowledge and a certain concept of taste which, like gastronomy, represents the identity of the country. If there is one economic sector that can claim a certain economic and cultural “sovereignty”, it is the luxury sector. A sector that has the advantage of not being affected by the crisis.
Well-being is the true thermometer of the health of the global economy. If a sector performs poorly, this is a bad sign for the economy, while the opposite is not always true. As proof of this, luxury is the sector that suffers least from the economic crisis we are going through. In other words, it represents the visible effect of enrichment of a part of the world’s population as in the case of China or India.
Luxury certainly embodies the mirror of financial success, a way of measuring one’s social worth and indicating one’s belonging to a particular socio-economic class, but also a certain notion of elegance, of what is beautiful and appropriate to the European way of life. This aspect is fundamental to understanding the difference between Europeans and Americans … Let us remember in passing that, as far as luxury is concerned, the latter have imported everything from Europe.
In an increasingly fast-paced world where technology occupies more and more space in our lives, the luxury sector has always paid special attention to identifying elements such as the central place of the human being, with his ability to innovate, his knowledge, his innovation and her creativity … Luxury manufacturers rely on these values that nurture them in the search for Perfection, quality and attention to detail. Finally, the sanctity of the product and its ability to be exalted, through stories linked to land and tradition, plays an essential role.
Along with the financial performance of the French and Italian groups, the luxury ecosystem is part of the real economy. It is made up of hundreds of thousands of employees, tens of thousands of craft firms, designers, tailors and manufacturers, but also tens of thousands of employees in the marketing and communications sector. Another important aspect is that the French and Italian luxury industry produces domestically for sale in China or the United States, as other industries produce in China for sale in Europe. If we compare the sector to high technology, we realize that luxury creates jobs while technology tends to destroy them. In 2022 alone, GAFAM will lay off tens of thousands of employees while the luxury sector hires them. This is no small feat in the current context where artificial intelligence is the latest innovation threatening to destabilize the employment of hundreds of thousands of people around the world.
For all these reasons, Europe must protect this very strategic sector, which guarantees a large part of its prosperity, but also of its history and identity.