> Self-proclaimed "luxury brands" have a dwindling market.

There's no evidence that supports that as a comprehensive statement. It very much varies from brand to brand and situation to situation.

The king of luxury, Bernard Arnault (LVMH), recently became one of the richest people on the planet (current net worth of $76 billion) because luxury has been massively expansive over the past decade. His wealth increased four fold over eight years up to the pandemic.

Another person in the same luxury boat as Arnault is Francois Pinault. $31 billion net worth. His wealth also increased four fold in roughly eight years, from $11b to $43b, up to the pandemic. Don't tell these people luxury is dwindling - their outcomes indicate it has boomed.

Ferrari's business has doubled in size and they have a market cap higher than Ford or GM because luxury has done so extraordinarily well over the last decade. Their stock hasn't crashed during the pandemic, unlike most auto stocks. Do you know why? The luxury buyers are not hurting like everyone else is (thus far). Times are good for Ferrari.

So what situations are causing this? China for one. And more broadly, the emergence of greater wealth all around the world, rather than it mostly being contained to the well-established developed nations of the post WW2 era. That global wealth increase is not matched by there being a lot more high-end luxury goods makers like Ferrari or LVMH, so the result is they've spent most of the past decade dealing with more business than they can easily keep up with.

While NM sold the likes of LVMH here it mostly made money by selling comfortable middle market rather than the top tier luxury because of the buying agreements:

The way the buying is structured, retailers cannot complete with flagships of the luxury brands they carry within a certain distance which means that the stored NYC, LA, Boston, SF, Miami which should be the most profitable can't carry the hot items of the seasons if the flagships carry them. Since flagships are not just retail but marketing and demo stores flagships always carry all the hot items.

The mid-tier market outsourced manufacturing to the same factories that at best create wear it a couple of times before it falls apart products while charging 3x-10x of the likes of Zara. That market has been shrinking for years as the likes of Zara, H&M and others cleaned up the lower end and started moving up.

Also the lion's share of luxury growth is coming from outside of the US, namely from Asia which is not accessible to NM.

> So what situations are causing this? China for one.

I think this is a key point. I was really just talking about America, where many people have rebounded from that sort of thing after embracing it 20-30 years ago. For China, traditional signals of wealth are still new and novel. People aren't sick of it yet.

Not sure the numbers bear that out:

https://www.prnewswire.com/news-releases/porsche-posts-recor...

https://www.cnbc.com/2020/01/13/lamborghinis-2019-sales-jump...

Anecdotally as well, Hermes does VERY brisk business by where I live (midwest), pre-COVID

I went in a Neiman Marcus a few months ago and was struck by how much they seemed to be selling "luxury". Like luxury apartments or Las Vegas facades, it all seemed like shoddy but shiny. I was asking people who their target consumer is and there really wasn't an answer. I didn't recognize any but a few of the brands and most of them seemed like they'd been invented for a thirty second scene in a TV show.

Exactly. People 20-30 years ago ate that stuff up; these days I think most people see it as garish and tacky.

Wealth signaling absolutely still happens, but today the facades it tends to orbit around involve words like "minimal", "natural", "open", "honest". Organic groceries, modernist houses, meditation retreats to exotic places, environmentally-friendly vehicles, freedom from clutter and complication. These, sadly, are unattainable for many people. And so of course, brands have co-opted and packaged up that fact to be sold as a set of signals that make people feel good about themselves in comparison to others.

I grew up in the south bay, around the early-googler generation of nouveau-wealth. I assumed the kind of wealth signalling typical then was normal. In my experience, fancy clothes were very abnormal and got you the wrong kind of looks. People liked to live in very nice houses on expensive land, but flaunting your wealth beyond that (and maybe your fast car) was generally looked down upon. Porsches were seen as a mid-life-crisis kinda thing.

I moved to NYC for after high school, and was incredibly shocked to see people actually wearing Gucci, Louis Vuitton, and not feeling self-conscious but rather better for it. I was likewise shocked to see how expensive the trendy secondhand stores were, again compared to the bay area. It all seemed designed so that, if you saw someone dressed in a certain style of clothing (either "boho-chic" or fancy brands), you could be safely confident they were rich.

I used to be repulsed and holier-than-thou about this kind of thing. But now, when I go back to the valley to visit my parents, I recognize the same things flourishing there, where I naively thought the "humble Californian spirit" wouldn't allow them to take root. It's been kind of sad to see the Santana Row-ification of the south bay take place during my lifetime, but everything moves in cycles, I suppose.

Does this match anyone else's experience? Is there a place where humility has survived as a popularly-held virtue, even in the face of not-atypical wealth/abundance?

Also grew up in the Bay. The peninsula and the South Bay are the epicenter of the Facebook, Google, and Apple wealth. As these companies have flourished, the surrounding area has become extremely flush with wealth. It was only a matter of time before the materialism that has been seen in LA and NYC set in as the Bay is in its heyday. If you're looking for humility, you'll find it centered around UC Berkeley and Oakland, as opposed to Stanford. The dichotomy between the two prestigious Bay universities is clear and they are the centers of the differences between the portions of the Bay. It's reflected by the types of students that attend and people drawn to the surrounding areas.

I was going to say the "humility" went north to SF, that's when SOMA became big and SF went from a banking center with a hippy fringe to a software center with a hipster fringe. Through it all, the old money has lived on Nob hill and shopped at Union Square (the local Nieman Marcus), but look at the gentrification of everything else. The sense of style and fashion of the newly-rich in SF drove the hipster look, which had its own issues but least it was nominally independent and not all about buying flashy brands at stores.

I do love the Stanford campus and Palo Alto downtown, but I do think they were marred by the big money. For example, Stanford literally has a luxury fashion mall (probably with a Nieman Marcus store) on campus (and it probably is the most profitable part of the endowment). As for Sunnyvale-Santa Clara-San Jose, they just chose the suburban sprawl development when the money rolled in.

I grew up in an eichler neighborhood same time as you where one out of five households bought the gen 2 Prius. That was virtue signaling.

I caught wind of some tech youtube vlog drama this week and I noticed that the newer generations view FAANG like some viewed Wall St. in the 80’s. The sorting hat for riches changes the gnomish wonder years of the Valley for sure. Also, the open air elitism is just plain tawdry now.

I would say San Diego has the closest look and feel to the South Bay when we grew up. Hard tech in the bio and life sciences provides an educational attainment culture and not so much cash chasing.

ha! I forgot about how big a deal the priuses were back then. Remember the whale-tail license plates? https://www.sgvtribune.com/2017/09/22/after-20-years-califor... If you sat on a busy suburban corner, you'd find 1 in 5 cars to be a particular-color prius with a whale tail. :)

I also totally agree that it's mostly the newcomers' barefaced pursuit of wealth and becoming "elite", that's driving this shift. People used to want to move to the bay because that's where UNIX geeks and internet enthusiasts went to find like-minded individuals (after Bell's decline) and get funding. Now it's where the aspiring class goes to join the top 10%, and the goods and services cater to it.

Last time I went back (immediately before the whole COVID situation), my SO and I did a road trip from LA to Sacramento, staying mostly with family along the way. We found San Luis Obispo and the various towns between it and Santa Barbara to be varied and delightful (Los Osos, Solvang, Avila & Shell Beach). Cambria also seemed nice, but we blazed through it. The little communities west a north of Santa Cruz, in the mountains also have a special place in my heart. Next time we're back, I'll try to visit SD.

However, I can't help but notice that all of these towns are smaller and much less of a mixing pot than the greater San Jose area, though. I thought one of the coolest parts of my early life was how it was extremely normal to be surrounded by people of diverse socioeconomic and ethnic backgrounds (I went to a public school), and also how normal it was to dream big (social mobility was all around you). Maybe it's a time and place thing, and it doesn't come together very often.

If you liked those small towns, I recommend walking/biking in Ojai. There's something special about it, which is hard to describe. It's one of my favorite places on Earth (yes, it could be the time and place thing).

Thank you for the suggestion, I've bookmarked it for the next time we're down there. Seems like the greater foothills of Los Padres National Forest is a favorable environment for the congregation of these great towns. :)

Bay area people value signal, if anything, more, but just in different ways. Not to distill it too much, but generally through social media posts about experiences, social issue positions, and "genuine"-ness.

>I went in a Neiman Marcus [. . .] I was asking people who their target consumer is [. . .]

This strikes me as hilarious for some reason. I'm not trying to be difficult, but did you honestly think anyone working on the salesfloor of the store to know what their target consumer was? That is a corporate strategy. In the store, their target is whoever comes in the door. They don't set style, they don't buy trends or fashions, they just put it on a shelf.

Heh, yes that would be hilarious, I am not so bold... or at least rude to poor salespeople. I mean I asked a few of my friends.

Many people on the store floor are primarily salespeople. They may not know the corporate strategy, but they know who comes in and what it takes to sell something to them.

If this was a west coast city, I'm sure they knew one of their target customers very well... they might even have Mandarin speaking staff.

Do the numbers reflect this? I'm just looking at the stock prices of a few luxury companies like LVMH and and Kering and it seems they were are at all time highs prior to COVID.

It might be because of China and the Chinese market/customers. It's only anecdotal, but last October I got to visit Vienna for one day (I live in Europe) and I was surprised to see a a lengthy queue outside the Louis Vuitton store close to the St. Stephen's Cathedral. First, I was surprised because I couldn't understand why would anyone still wait in that sort of queue for something to purchase in this day and age (when everything it's at a few clicks distance), and second I was also a little surprised by the fact that about 75% of the people waiting in that queue were of Asian origin, most probably Chinese.

These people are probably wealthy enough not to care but if I were buying a $5000 purse I'd want to do it in person, like I'd test drive a car before I bought it.

Also if I were traveling on vacation, ordering online and shipping to my hotel would not be my first choice.

> couldn't understand why would anyone still wait in that sort of queue for something to purchase in this day and age

for the social media photo / story of buying it in $exotic_locale

bonus points if you are confusing things by buying french items in austria, obviously

Coronavirus accelerated the trend.

https://www.mckinsey.com/~/media/mckinsey/industries/retail/...

Just my anecdotal impression; it's possible I'm biased by the extents of my bubble

You probably are.

Go to Vegas and there are whole shopping malls where, to indulge in just a degree of hyperbole, I'd have to look hard to find something I could afford. Or at least would even consider affording.

> Go to Vegas and there are whole shopping malls where, to indulge in just a degree of hyperbole, I'd have to look hard to find something I could afford. Or at least would even consider affording.

IIRC, Americans don't really shop at those stores. Their costumers are mainly foreign nouveau rich people.

In fairness, conspicuous consumption is one of the primary draws of Vegas. Probably not a very representative example.

And it's also a one-off, in a national and international sense. It's like judging consumption levels in the Muslim world by Dubai.

NYC has more than one of these sort of malls.

And those malls are usually pretty empty, from my experience.

It's on the upswing among the youth. I'm seeing a lot more plain black hoodies with BALENCIAGA screen printed across the front. Gucci and versace have seen a resurgence, even their rubber slides which are probably less comfortable than a $15 pair are coveted and featured in music videos. Dressing nicely to some might mean a gaudy branded t shirt under a blazer, percieved by the wearer as passable for nice attire due to the three figure price tag, but really it's the same material as the $5 undershirt I have under my button down.

To be fair, the materials and labor used by high end brands (at least the ones you mentioned) are different from cheap brands. Most of the labor is Italian or Portuguese, and those workers get a paid month off every year in addition to benefits, even if they aren't highly paid. Likewise, the materials they use are generally higher quality and are sourced more carefully. High end brands also do a shitload of QC.

I'm not a fan of $100 t-shirts but there is absolutely a difference including much fairer practices in how the garment is manufactured.

Even that depends now. For awhile there was a strategy for diffusion lines where brands would sell cheaper goods under a slightly different label. Think Burberry Brit, Versace Collection, or Polo Ralph Lauren.

Nowadays the trend is to put everything under the mainline brand, which I find kind of deceptive. You really have to check garment quality and price for everything.