As FashionUnited has reported, Gucci’s sales have tumbled in the first quarter of 2024, falling by 20 percent mostly due to a slowdown in Asia, while Kering’s overall revenue is forecast to be down 10 percent compared to Q1 last year. The group’s other brands, Saint Laurent, Bottega Veneta and Alexander McQueen, have also taken a hit, and after several roaring years, in the last quarter of 2023, the deceleration also caught up with brands such as Burberry and Louis Vuitton. Inflation and cost of living crises have caused consumers in Europe and the US to pull back on their luxury purchases.

Saks CEO, Marc Metrick, told the NRF audience in January that neither the Chinese consumer nor the NYC big spender have yet returned to their pre-pandemic behavior, but he also added, "The luxury consumer is generally the last in and first out of a crisis. They are a resilient consumer.” But with the likes of Chanel hiking their prices to weather the slowdown, data from Vogue Business shows that customers are more likely to shop less, over half will wait for promotions and sales, and over one third will buy more via resale channels.

In response the smartest brands are pivoting their focus to areas of the world where there is an emerging and somewhat untapped luxury consumer. Anusha Coutticane, Head of Advisory at Vogue Business, refers to these markets as “Luxury’s new global gateways.” Analyzing data, insights and bespoke consumer research for fashion and luxury businesses from Vogue Business Index, a bi-annual study of the top 60 global luxury brands, driven by consumer research across 11 markets, reveals that there are clear indications that opportunity exists for luxury brands if they look beyond the established markets to 3 new territories.

Brazil, Middle East and South Korea represent new opportunity for luxury brands

The three markets to watch are Brazil, the Middle East and South Korea. Financial drivers for brands in these hotspots are handbags, footwear, jewelry and watches, items which often constitute first purchases for this emerging consumer engaging with luxury. Brands should be aware that each territory presents specific social, economic and cultural trends that will impact spending behavior.

There are a lot of eyes on Brazil, said Coutticane, because new tax reforms make doing business in the country easier. Whereas brands interested in expanding in the Middle East should avoid the common mistake of treating the Middle East as a monolith. Breaking down the opportunities specific to the region is important. The United Arab Emirates, Qatar, and Saudi Arabia have strong expat communities with significant spending power. 2 percent of Qatari citizens are millionaires, putting them ahead in wealth over Kuwait, UAE and Saudi Arabia. However 63 percent of Saudis are under 30 representing a new luxury consumer ready to be courted. It is also important to note that shopping in the Middle East is very much a social activity, and brand advocacy is often reliant on word of mouth rather than social media or other established channels.

Luxury spending in South Korea has overtaken China and the US and this consumer is already a major contributor to the revenue of brands such as Prada, Bottega Veneta, Moncler and Burberry. It was a South Korean company, Coupang, known as the Amazon of Asia, that acquired Farfetch. In South Korea, celebrities and high profile non-fashion events can drive strong fashion spending. September's Frieze Seoul, only the country's second edition of the internationally renowned art fair, attracted more brands than Seoul Fashion Week.