Prospects for the global luxury industry don’t look very good.

Exponential increases in energy costs, rising inflation, raw material shortages, geopolitical tensions and decline in consumers’ purchasing power have abruptly cast a very dark shadow. Leading luxury groups have had to revise their forecasts downwards, despite the remarkable quarterly results recently posted by them.

Leading luxury groups recorded growth between 25 per cent and 30 per cent. But these results have to take into account an exchange rate impact of approximately eight per cent owing to the rise of the dollar. To cover their growing costs, major labels have also increased their prices without affecting demand. However, they are currently far below the sales peaks recorded in July and August, which prompted favourable expectations.

The luxury industry was accustomed to double-digit growth but, next year, growth will more likely be in the single digits. Until three or four years ago, it was enough for a company to have prospects in Asia. Not any more, now brands need to have a strong identity and the potential to grow globally.Mergers and acquisitions are therefore expected to multiply. A stock market listing is a mandatory choice, to provide transparent governance and facilitate generational handover, so that family members may be able to better manage the group in future. It helps clarify the roles of family members and external executives.