What luxury is telling us

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{"text":[[{"start":null,"text":"<div class=\"pic\"><picture><source media=\"screen and (max-width: 490px)\" srcset=\"https://thumbor.ftmailbox.cn/unsafe/980x0/https://d1e00ek4ebabms.cloudfront.net/production/ec50fc49-64b4-4375-bd13-274cfc2589e6.jpg\"><img src=\"https://thumbor.ftmailbox.cn/unsafe/1920x0/https://d1e00ek4ebabms.cloudfront.net/production/ed7b76c8-374d-40f0-855b-81bdafff09d0.jpg\"></picture></div>"}],[{"start":7.97,"text":"With Christmas just a couple of days away, it’s a good time to take stock of the shopping season. "},{"start":13.286999999999999,"text":"I think a fair bit about the luxury retail market, because where the rich lead, the market — and even the economy as a whole — tends to follow. "},{"start":20.879,"text":"This past year was the worst for the luxury industry since the great recession of 2007-09. "}],[{"start":26.849999999999998,"text":"While the super-rich are still spending as if they exist in a separate gravitational orbit, the aspirational consumers who make up the all-important “mass luxury” part of the market are scaling back. "},{"start":36.479,"text":"That goes a long way to explaining why many of the world’s largest luxury companies have underperformed recently. "},{"start":42.059,"text":"There are, after all, only so many watches and handbags that the one per cent can buy. "}],[{"start":48.29,"text":"And the number of people who can afford this sort of thing is declining. "},{"start":51.919,"text":"The latest Bain luxury market report, released in November, found that the luxury market shrank by about 50mn consumers over the past two years, in part because younger consumers are turning away from traditional luxury goods. "},{"start":64.012,"text":"I suspect that this is one of the reasons you are (finally) seeing older people, particular older women, in advertising and even on fashion runaways. "},{"start":72.20400000000001,"text":"They are the only people buying stuff. "}],[{"start":74.75,"text":"But there are other reasons that luxury has lost its lustre, notable among them the pervasive feeling that economic insecurity may be around the corner, despite buoyant markets. "}],[{"start":84.45,"text":"If you discount the V-shaped Covid blip, we are six years overdue for a recession. "},{"start":89.292,"text":"Meanwhile, the bizarre world of the US equity markets, which are priced for perfection, has everyone at New York dinner parties talking about when (and if) they are planning to take at least some of their portfolios to cash. "}],[{"start":101.41,"text":"Despite this, or perhaps because of it, the super-rich can still spend. "},{"start":106.05199999999999,"text":"Those in the ultra-wealthy segment of the luxury market — meaning the people who spend their excess cash on yachts and jets (both sectors which are doing quite well) — have seen their net worth bolstered by double-digit asset market growth. "},{"start":117.594,"text":"There’s big fleet expansion in the super high-end cruise business, and growth in luxury cars and hotels is still strong. "}],[{"start":124.84,"text":"But less wealthy people who were once ready to splurge on that $500 handbag are being far more cautious. "},{"start":131.019,"text":"That’s because they, unlike the super-rich, still have to worry about working. "},{"start":135.299,"text":"Aspirational consumers’ disposable incomes are down, having been affected by reduced job openings and increasing voluntary turnover rates, according to the Bain study. "},{"start":144.354,"text":"T