What: The Financial Times wonders if the clientele for luxury is not simply vanishing for multiple reasons.

Why it is important: Any issue with luxury retail would impact department stores hard.

The global luxury goods industry, which boomed post-pandemic with an average growth of over 20% annually since 2020, is witnessing a slowdown. Shoppers have reduced luxury spending due to rising prices and a sluggish economic outlook.

After enjoying record growth fueled by lockdown-induced indulgences and China's growing affluent class, luxury spending is moderating. Industry giant LVMH reported a quarterly sales growth of 9%, down from 17% the previous quarter.

LVMH's CFO expects growth to align more with the historical average rather than the recent surges. Despite growth in Japan, luxury markets in the US, Europe, and other parts of Asia are cooling off. While luxury grew significantly in the past few years, the industry's historical growth rate is closer to 6%. This year, growth might average 5-10%.

LVMH's sales reveal a decline in the demand for wines and spirits, especially in the US.

Department stores are adjusting inventories, focusing more on aspirational luxury price points. While brands like Chanel and Hermès remain strong, many other recognizable luxury brands are struggling. Economic pressures like inflation, which outpaces wage increases in Europe and the US, have eroded consumer spending power.

Overall, the luxury industry is moving towards a more moderate trajectory due to a blend of economic pressures and possibly waning consumer interest in luxury goods.

How many customers can really keep on buying luxury?