Inflation has certainly impacted the luxury sector, with Milton Pedraza of The Luxury Institute, sharing, “For all top tier luxury brands and groups, a major portion of the growth in 2022 has come from strong pricing, and much less from like-for-like volume growth.”
According to Daniel Langer, CEO of consultancy Équité and executive professor at Pepperdine University, the ability to raise prices in the luxury sector is a critical success factor for brands.
“The stellar performance of LVMH’s top brands, including Louis Vuitton and Dior, is the result of an uncompromising focus on brand equity building, brand storytelling and precise execution of the brand experiences. Over the last two years, the leading brands increased prices beyond historical precedent, translating the continuous brand equity building into profitable growth,” he shared.
Brand equity is found in the desirability factor that Arnault talked much about during the earnings call. It hinges on continued investment in brand building, which he said the company will continue to do aggressively.
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