Today, I will provide you with knowledge services from two perspectives.
1. The Trends in the Luxury Goods Market
Why pay attention to luxury goods? Because they often reflect the spending habits and financial confidence of those who love to spend and have the ability to do so.
According to Keynes’ marginal propensity to consume theory, during economic downturns, luxury goods are typically the last to experience a decline in sales. This is because luxury buyers are those with a high tendency to spend—if even they stop spending, it indicates significant economic pressure. Conversely, when the economy recovers, luxury goods are often the first to rebound. Their consumers tend to be the most optimistic, sensing economic recovery early and spending boldly.
In simple terms, according to Keynesian theory, a booming luxury market does not necessarily mean the overall consumer market is strong. However, a struggling luxury market is a clear signal of weak consumer confidence. Of course, economists have differing opinions on this theory, but it at least suggests that luxury goods serve as an important reference when analyzing consumption trends.
So, what has changed in the luxury market over the past year?
According to Bain & Company, the global luxury goods market in 2024 experienced a rare and significant decline. How rare? Apart from the early pandemic period, the last major downturn was during the 2008 financial crisis.
At first glance, the market pressure seems substantial. However, upon closer examination, it is not simply a matter of “good” or “bad.” The luxury market has undergone many subtle structural changes.
Let’s discuss three key trends worth noting.
1. Ultra-Luxury Remains Resilient – The Wealthiest Still Spend Freely
Even within the luxury industry, there is a hierarchy. For example, in the handbag market, Hermès sits at the top of this hierarchy. People often use Hermès as a metaphor for extreme luxury—whether it’s the “Hermès of pens,” the “Hermès of bicycles,” or the “Hermès of sneakers.”
In 2024, Hermès reported revenues of €15.2 billion, a 15% year-over-year increase, despite continuously raising prices throughout the year.
What gives Hermès the confidence to raise prices? One key factor is their VIC (Very Important Client) customers. While VIP means “important customer,” VIC refers to super VIP customers. According to Bain & Company, there are about 400 million luxury consumers worldwide, but VIC customers make up less than 1%. However, this small group contributes nearly 30% of total sales.
These VIC clients are categorized as the ultra-rich, meaning the wealthiest of the wealthy. Even among the rich, the 80/20 rule applies—20% of wealthy individuals hold 80% of the total wealth, and these VIC clients represent the top 20% of the wealthy class. Their spending behavior is nearly unaffected by economic cycles, making them the most sought-after customers in the global luxury market.
Building relationships with VIC clients is not an overnight process. Take Hermès, for example. Although the company has never officially acknowledged it, there are persistent rumors about its “quota system.” Under this system, customers who want to buy an exclusive handbag must purchase other products alongside it. While the bag itself may cost $10,000, customers often end up spending tens of thousands on additional items. This practice has created a loyal following of long-term customers. Additionally, Hermès frequently holds private events for VIC clients to strengthen their brand loyalty.
In short, when the market is booming, VIC clients provide extra revenue. But when the market faces pressure, VIC clients become the brand’s strongest defense.
2. The Rise of “Affordable Luxury”—Small Luxuries Gain Popularity
Many consumers now buy luxury goods as small personal rewards, leading to increased demand for low-cost luxury items.
For example, in 2024, despite LVMH Group’s overall struggles, its fragrance and cosmetics division grew. Similarly, among the three global luxury giants—LVMH, Richemont, and Kering, Kering suffered the biggest decline, with its leather goods sales dropping by over 44%. However, its eyewear division saw a 32% increase in sales in the first three quarters of the year.
Products like perfumes, eyewear, and cosmetics are much cheaper than leather goods, fashion, and handbags. Meanwhile, luxury brands are increasingly targeting middle-class consumers and expanding their marketing efforts to appeal to a broader audience.
A notable trend is the rise of cross-industry collaborations, such as LV partnering with MANNER Coffee or Fendi collaborating with Heytea. Luxury brands are actively finding ways to appeal to middle-class consumers.
3. Gen Z Becomes the Key Driver of Luxury Consumption
According to Xiaohongshu’s 2024 Luxury Trends White Paper, young Gen Z millionaires are now a critical force in the luxury industry. Among luxury consumers, 50% were born after 1995, and 35% were born after 2000. Bain & Company predicts that by 2030, Gen Z will account for 25%-30% of the global luxury market, while Millennials will make up 50%-55%.
In the luxury car segment, Aston Martin, Bentley, and Rolls-Royce saw declining sales, while Lamborghini, which has a younger target audience, continued to grow.
Another example is the luxury handbag brand Goyard, which saw explosive growth in 2024, even rivaling Hermès in performance. Goyard’s handbags, which resemble durable canvas tote bags, are particularly popular among younger consumers. According to second-hand luxury platform Rebag, Goyard bags retained 104% of their value in 2024—meaning buyers who purchased them early in the year could resell them at a profit by the year’s end.
Summary of 2024 Luxury Market Trends
- Despite economic pressure, ultra-luxury brands remain resilient, supported by the ultra-wealthy.
- Luxury brands are shifting towards “affordable luxury” to attract middle-class consumers.
- Gen Z is the dominant force shaping the future of the luxury market.
2. Netflix’s Squid Game Season 3 Announcement
Recently, Netflix announced that Squid Game Season 3 will premiere in June 2025. Interestingly, Seasons 2 and 3 were filmed together, but the third season’s release was scheduled later.
Squid Game was Netflix’s first globally successful Korean drama and played a crucial role in Netflix’s decision to invest heavily in Korean content. In recent years, Netflix has also ventured into Japanese dramas, with the breakthrough success of Alice in Borderland (2020).
The “Battle Royale” Story Model
Interestingly, Squid Game and Alice in Borderland share the same story framework: Battle Royale.
The Battle Royale genre originates from a 2000 Japanese film directed by Kinji Fukasaku. The premise is simple: a secret organization traps a group of high school students on an island, gives them random weapons, and forces them to fight to the death until only one survives.
Sounds familiar? Many popular movies have drawn inspiration from this concept.
Japanese cultural critic Uno Tsunehiro analyzed the origins of the Battle Royale genre and argued that its emergence was not a coincidence, but rather a product of societal and cultural shifts.
What Does It Mean?
Uno Tsunetaka stated that before Battle Royale emerged in 2000, Japanese society had undergone three distinct phases.
Phase One: 1945 to Late 1960s – “No Material Possessions but Stories”
This was Japan’s rapid post-war economic reconstruction period. During this time, Japan experienced double-digit economic growth, along with a surge in anti-American sentiment and frequent social movements. Uno Tsunetaka referred to this phase as the era of “No Material Possessions but Stories”.
- Material possessions (物) refer to tangible goods and resources.
- Stories (物语) refer to narratives or ideals.
- The phrase means that despite material scarcity, people had strong aspirations and ideals.
As a result, Japanese films and television of this era often featured grand narratives about saving the world. Ultraman, for example, was born in this period.
Phase Two: 1970s to 1991 – “Material Possessions but No Stories”
During this period, Japan’s economic growth slowed, consumerism expanded, and society became relatively relaxed. After the 1985 Plaza Accord, the yen appreciated significantly, leading Japan into a brief economic bubble. Uno Tsunetaka described this period as an era of “Material Possessions but No Stories”.
- People had money, but they lacked a sense of purpose and meaning in life.
Consequently, many films and TV series of this era served to provide a sense of meaning. Works like Dragon Ball and Saint Seiya emerged during this period. Their core message was that life should be about striving forward—if one continues to fight and persevere, they can become a respected hero.
Phase Three: Early 1990s Onward – “No Material Possessions, No Stories”
Following the collapse of Japan’s economic bubble in the early 1990s, Uno Tsunetaka described this period as “No Material Possessions, No Stories”.
- This does not mean Japan returned to a time of material scarcity.
- Rather, people could no longer derive a sense of meaning from material consumption.
- The economic myth had collapsed, and salarymen found themselves trapped in relentless competition (neijuan, or excessive internal rivalry).
In short, the collective societal mood shifted from “If you work hard, things will get better” to “You must work hard just to survive”. Before, people had the mindset of striving; now, they had the mindset of escape.
This shift in mentality set the stage for Battle Royale. The film wasn’t just a sudden stroke of genius by the screenwriter—it resonated deeply with the societal emotions of the time.
Another Emerging Story Genre: Small Happiness in a Big Era
Aside from Battle Royale, another type of narrative also gained popularity in this period: stories centered on small personal joys amidst a chaotic world.
- Even as the world faced massive threats, the protagonist didn’t concern themselves with these grand events.
- Instead, they focused on their own life, their loved ones, and the small things around them.
This sentiment echoes the famous line from poet Hai Zi:
“Tonight, I do not care about humanity. I only care about you.”
A prime example of this narrative type is Neon Genesis Evangelion (1994).
Final Thoughts
Of course, this perspective is just Uno Tsunetaka’s interpretation. It may not be a complete explanation, but it serves as an interesting topic of discussion. If you’re intrigued by this subject, you might want to check out Uno’s book The Imagination of the 2000s (which has a summarized version available on audiobook platforms).
Summary of Today’s Topics:
- New Trends in the Luxury Market – The mid-tier luxury segment is facing the greatest challenges, whereas top-tier ultra-luxury and small-ticket luxury items for the middle class continue to see growth.
- The Origins of Battle Royale – According to Uno Tsunetaka, the story wasn’t just a product of creative brilliance. Instead, it emerged from shifts in Japan’s socio-economic landscape, which transformed people’s internal narratives and ultimately gave birth to Battle Royale.
That’s all for today’s discussion!
