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Luxury sector: What’s at stake as nationalist policies gain ground?

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Translated by

Nazia BIBI KEENOO

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March 27, 2025

For decades, globalization has been the driving force behind the luxury industry’s expansion. However, this long-standing framework is now under pressure as nationalist sentiment gains momentum across major markets, including the U.S. and China. According to analysts at Bernstein, this shift could slow the progress of luxury brands already navigating a fragile economic landscape in the context of rising geopolitical and trade tensions.

U.S. tariffs shake up the luxury industry – Ph Caleb Woods – Unsplash

Luxury has long relied on globalization to fuel its growth, steadily reaching new markets across the world. So far, the sector has proven resilient—even amid the war in Ukraine and resulting European sanctions against Russia, which once served as a key market. Wealthy Russian consumers continued to access luxury products through alternative destinations such as the Gulf, Israel, Switzerland, or London.
But with tariffs on global exports to the U.S. now increasing, the landscape is shifting.

“If tariffs rise to 20–25%, it could hinder China’s economic recovery and weaken American consumer demand. If they reach 200%—as former President Donald Trump suggested for spirits—it would effectively shut the U.S. market to European alcohol producers,” Bernstein stated. In its recent “State of Luxury” report, McKinsey estimated that import tariffs could slash U.S. luxury spending by $46 billion to $78 billion annually.

Luxury brands are already exploring ways to adapt, with geographical rebalancing emerging as a key strategy. While China has yet to impose major tariffs on luxury goods, many brands have scaled back their presence in the market since the pandemic. A combination of COVID-19-related restrictions, a more nationalistic tone, and slowing economic growth has prompted several players to reduce investment in what was once among their most profitable markets.

At the same time, brands have expanded their footprint in the United States, opening stores in cities beyond traditional hubs like New York and Los Angeles. Locations such as Detroit, St. Louis, Nashville, and Austin are now part of its growth strategy. Looking ahead, companies must focus on generating revenue from a more diverse and balanced mix of national markets. Some, including Bulgari, are already exploring new destinations, such as India, to support long-term growth.

Schiaparelli launched a high-impact pop-up in Shanghai at the end of 2024.
Schiaparelli launched a high-impact pop-up in Shanghai at the end of 2024. – DR

Another strategy Bernstein recommends is stronger local engagement, particularly through storytelling and globally resonant partnerships. Sports offer a powerful universal language that luxury brands are actively leveraging. Notable examples include LVMH‘s sponsorship of the Paris 2024 Olympic Games and its decade-long global partnership with Formula 1.

Offshoring could also become a solution. To mitigate the impact of high U.S. tariffs, some companies may consider producing locally—especially if supported by federal or state incentives.

Louis Vuitton is a notable case: In 2019, the brand opened a factory near Dallas, Texas, to manufacture handbags and leather goods exclusively for the American market. However, this approach risks weakening a major selling point—the prestige of “made in France” or “made in Italy.”

With the United States remaining the top market for luxury brands—and luxury spending in China dropping 18–20% in 2024, according to Bain & Company—the current year may be more turbulent than anticipated, despite earlier hopes of a rebound in the second quarter.

“Results for fiscal 2024 confirmed an improvement in cyclical demand,” Bernstein analysts concluded. “But recent political decisions in the United States have made the outlook far more uncertain.”

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Gieves & Hawkes takes Savile Row north with new space in Flannels, Leeds

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An important name on London’s Savile Row has arrived in Yorkshire. In a 254-year retail first, British luxury heritage brand Gieves & Hawkes, now owned by Frasers Group, has opened a store-in-store within the group’s Flannels flagship in Leeds.

And the brand’s journey outside London won’t stop there. The North-East debut “marks a significant milestone in the brand’s history and is a precursor to a wider regional expansion strategy to tap into a desire for craftsmanship, integrity, and authenticity outside of the capital”, Frasers, which operates 80 Flannels stores, said.

Located on the second floor alongside luxury peers including Burberry, Alexander McQueen and Tom Ford, the 600 sq ft Leeds space carries a design reminiscent of its Gieves & Hawkes’ No.1 Savile Row home.

The space will provide “an elite service across made-to-measure and Spring/Summer 2025 ready-to- wear collections from expert staff, trained at the No.1 Savile Row headquarters”.

“For centuries, Gieves & Hawkes has sourced tailoring fabrics from Yorkshire, making this opening in the heart of Leeds especially meaningful,” said Michael Murray, CEO of Frasers Group.

“This store-in-store enables Gieves to showcase its quintessentially British luxury house alongside some of the most desirable brands in the world,” he added.

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Harrods revises abuse compensation payout figures – report

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The owners of Harrods have agreed to increased maximum payments to survivors of Mohamed al Fayed’s sexual abuse to around £400,000 under a new redress scheme, according to Sky News.

Harrods

The Qatar-owned department store has revised the terms of a compensation scheme to be offered to hundreds of sexual abuse victims of the former owner.

The report says lawyers for Harrods have increased the maximum potential payout from around £330,000 following consultation with claimants’ legal representatives.

Sources said final proposals for the compensation scheme would be published Monday (31 March), although some victims may still face a lengthy wait to receive their payouts, the report added.

People close to the talks about the compensation scheme said the final proposals included general damages lump sums of up to £110,000 or £200,000 – with the higher figure available to claimants willing to submit to psychiatric assessments arranged by the company.

One source said the revised maximum compensation sum to be disclosed on Monday was now expected to be between £350,000 and £400,000.

A Harrods spokesperson reissued a statement previously given to Sky News, saying: “It would be premature for us to comment on the nature and details of a scheme that is currently under consultation.

“We are actively inviting the valuable input from Survivors and their legal representatives to establish the final scheme that aims to be survivor-first, trauma-informed, and fair in its approach to compensation.

“Further updates will be provided once the consultation period is complete.”

The redress scheme is being coordinated by MPL Legal, an Essex-based law firm.

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Victoria Beckham names ex Dior exec Sybille Darricarrère Lunel new CEO

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The house of Victoria Beckham has named Sybille Darricarrère Lunel – a former Dior and Galeries Lafayette executive – to be its new CEO.

Sybille Darricarrère Lunel becomes CEO of Victoria Beckham on July 1

 
Darricarrère Lunel takes up her new job on July 1, succeeding acting CEO Ralph Toledano, who has held the position ever since the departure of Marie Leblanc in October of last year. She returned to Paris to become CEO of Courrèges.
 
Victoria Beckham, who founded the house back in 2008, said in a release that she excited by having a “strong, creative, smart woman with an entrepreneurial mindset and energy by my side. I look forward to leading this company with Sybille and having her knowledge and respect for product, and her experience in the industry, to help us go to the next level.”

While Darricarrère Lunel enthused: “I am absolutely delighted and thrilled to be joining Victoria Beckham as its new CEO. I have always admired the brand’s feminine, elegant, and modern style, which empowers women. I have a deep admiration for Victoria’s work, her sincerity, her creative vision, and her attention to detail. I look forward to collaborating with the talented teams who have achieved remarkable success alongside her, as we begin building exciting new chapters together.”
 
After the arrival of Darricarrère Lunel, Toledano will continue to be chairman of Victoria Beckham, a position he has held since 2017, when the French group New Investment Partners, of which he is a key player, acquired 30% of the Beckham fashion business.
 
Darricarrère Lunel, who has previously been global business unit director of leather goods at Christian Dior Couture, will be based in London. Prior to Dior, she was general merchandise and buying director at Galeries Lafayette, after a stint at The Kooples working in planning and merchandising.
 
“Her career to date, and her understanding of product, make her the perfect CEO for our brand. I am sure that following the achievements of the past few years, and with the support of our great team, she will considerably accelerate the growth of Victoria Beckham,” said industry veteran Toledano.
 
Adding that Darricarrère Lunel’s “entrepreneurial spirit, enthusiasm and intelligence immediately spoke to me when we first met.”
 
After a half decade of substantial losses, Victoria Beckham’s house returned to profitability under Neo’s guidance in the past two years, ushering in a period where Victoria has created some her strongest collections to date.

Victoria Beckham - Autumn-Winter 2025/26 Paris
Victoria Beckham – Autumn-Winter 2025/26 Paris – ©Launchmetrics/spotlight

 
While David Belhassen, Founder & Managing Partner NEO Investment Partners, added:  “For any company, there comes a moment when the right leadership unlocks its true potential. With Sybille, and her natural entrepreneurial energy, that moment is now. Her sharp understanding of product, combined with her drive, makes her our perfect partner to write the next chapter for Victoria Beckham— one of ambition, creativity, and high profitable growth.”
 
 
 

 

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