For years Europe has taken centre stage in the world of luxury brands with France and Italy in the forefront. The French word haute couture epitomizes ultimate luxury of bespoke apparel and the official appellation is granted by ‘Chambre syndicale de la haute couture’ to luxury brands that meet the stringent standards of creativity, quality and exclusivity. The US, despite being the single largest luxury market in the world for decades, has not had a seat at this table until now. However, when Estée Lauder purchased the iconic brand Tom Ford in November 2022 for $2.8 billion, the world has woken up to the entry of American luxury in Europe’s domain. Tom Ford has turned out to be far more expensive as a luxury brand than the Chanels, Diors and Guccis of the world. A Tom Ford suit starts at $5,000 compared to a bespoke Zegna suit that starts at $3,000. A 30ml Tom Ford’s Lost Cherry scent retails at $240 which is more than a 30ml bottle of Miss Dior at $72 and a 30ml bottle of Hermès D’orange Verte at $ 132. It is the first time that an American brand has out-positioned European luxury brands in terms of premium pricing and met success.
American brands are quintessentially mass or bridge
When it comes to fashion brands that have catered to the masses for their fashion fix, the US has not been wanting. Sports brands like Nike and Under Armor are now legends not only in sportswear but also in athleisure, the new trending fashion. Old Navy, GAP, Banana Republic, Levi’s, Wranglers and a slew of such mass brands have held sway in the mass global market. The US has also produced bridge brands that straddle the middle between mass and luxury and is often termed accessible luxury – Kate Spade, Coach, Tory Burch, Tommy Hilfiger, Michael Kors, Ralph Lauren and Calvin Klein are some of the more well-known ones.
It must be noted since US is a young nation born out of a revolution, it did not have the legacy of aristocracy, kingly courts and entourages that were traditional patrons of luxury across Europe. What the US did have was economic success pre and post WWI and WWII, which influenced the world with its casual lifestyle that was seen as liberating, equalizing and trendy. Hence, the success of mass fashion a la American style. The success of mass or high street American brands gave birth to its very own accessible luxury brands that sat well with upwardly mobile professionals who wanted a taste of luxury without the deep end pocket.
The current world of luxury
According to Statista Luxury Markets by Revenue 2022 Report’s rankings, the American luxury goods industry lead all other nations by far, generating around $65 billion 2020 and expected to reach $81.5 billion by 2025. China remains the second largest luxury market valued at $39 billion in 2020 and expected to reach over $56 billion by 2025. Japan, France and Germany are in third, fourth and fifth position with 2020 values at $28.2 billion, $14.1 billion and $11.9 billion and 2025 projections at $36.1 billion, $ 20 billion and $17 billion respectively. The downturn of the Russian economy after its war on Ukraine has not created any dent in the luxury goods sector as it only represented a mere 2 per cent of the total value. In 2022, LMVH remains the most valuable luxury brand, valued at $124.3 billion, and its fiscal year 2021 revenues at $68.41 billion.
