Quiet Luxury Brands Gain Investor, Consumer Notice Over Loud Ones

Quiet luxury, a fashion movement characterized by subtle displays of wealth and sophistication, has captured the attention of consumers and investors in recent years. Brands such as Hermès, Miu Miu, and Brunello Cucinelli, have surged ahead of their louder counterparts by 23% points in 2023, according to data from DBS Bank. 

Kering Group, the parent company of Gucci, Balenciaga, Bottega Veneta, Yves Saint Laurent, Creed, and Alexander McQueen, reported €19.6 billion in revenue in its 4Q23 report, marking a 4% decrease due to changes in exchange rates and consolidation scope, according to its financial report. The group’s sales from the directly operated retail network, including e-commerce, remained stable on a comparable basis, while wholesale and other revenue decreased by 11% due to enhanced exclusivity in distribution. 

However, other “loud” luxury, brands with noticeable logos, have recovered from the previous downturn. Luxury giant LVMH Moët Hennessy Louis Vuitton reported revenue of €86.2 billion in 2023. Despite starting the year with a six-month low in stocks, the group’s standing received a 20% boost following its 4Q23 results.

“Our performance in 2023 illustrates the exceptional appeal of our Maisons and their ability to spark desire, despite a year affected by economic and geopolitical challenges. The Group once again recorded significant growth in revenue and profits. Our growth strategy, based on the complementary nature of our businesses, as well as their geographic diversity, encourages innovation, high-quality design and retail excellence, and adds a cultural and historical dimension thanks to the heritage of our Maisons,” says Bernard Arnault, Chairman and CEO, LVMH. 

Luxury spending patterns are evolving, driven by factors such as China's recovery and emerging markets like India. With an estimated 100 million people in India projected to become affluent by 2027, luxury brands are diversifying their focus beyond traditional markets.

The rise of quiet luxury has also impacted brands associated with louder expressions of wealth. Kering-owned Gucci and Burberry experienced downward pressure in global luxury stock rankings as investors pivoted towards companies aligned with the quiet luxury ethos.

Despite a slowdown in luxury spending, Hermès' stock has grown 27% over the past year. Unlike other brands that have leaned into social media marketing and celebrity partnerships, Hermès has stayed true to its core products and embraced scarcity as a key to its success. The brand's refusal to chase mass appeal has helped maintain its allure and exclusivity, according to Business Insider "The curse of retail is everyone chases more," Simeon Siegel, Senior Retail Analyst, BMO Capital Markets. "At some point, that hurts the brand."

Luxury groups bet on the normalization of the market in 2024 to recover or further establish their brands in the market, quiet or not but still anticipate a slow start of the year. “In a context of ongoing normalization of the sector’s growth, the impact of Kering’s investment strategy will weigh on the group’s full-year recurring operating income, which should post a decline compared to the level reported in 2023, particularly in the first half of the year,” reads Kering’s report. 

Amid the evolving luxury landscape, Mexican consumers have shown an affinity for quiet luxury. Luxury retailers like El Palacio de Hierro and Saks Fifth Avenue carry brands categorized as quiet luxury, resonating with discerning consumers seeking understated elegance.