July 31, 2023
Quiet Luxury is a term used to describe a style that is understated, well-constructed, and timeless. Muted colors, the absence of branding, and simple elegance are how quiet luxury fashion is worn. Though not a new concept, the terminology has been used more recently in fashion and lifestyle publications and eschews exclusivity. The concept has gained more attention recently through the popular Netflix series, Succession, where the family gives the audience a very visually satisfying look at the dress and sumptuous but understated surroundings in which they live. The idea is not limited to clothing items but extends to the way that the wealthy live.
Individual investors looking to purchase stocks that exemplify quiet luxury may be inspired by the perception that these stocks make goods with more endurance and quality. Well-constructed luxury goods are made to last, to look and feel timeless, and similarly, luxury stocks have weathered pandemic volatility and are brands that represent heritage, prestige, and scarcity. Interestingly an aspect of quiet luxury is the lack of visible branding, logos, and typography, and yet the brand is what drives the sale of luxury items and luxury stocks.
For many individual investors, retail products are synonymous with luxury brands. Burberry (Tii:BURBY), Jimmy Choo (owned by Capri Holdings, Tii:CPRI), and Stuart Weizmann of Tapestry, (Tii:TPR) are well-known retail brands. Quiet luxury is a way of life that is attractive internationally. In mainland China, an emerging upper class is seeking quiet luxury items and greatly impacting sales at brands like LVMH.
As the world’s largest luxury company, worth approximately $300 billion, Louis Vuitton/Moët/Hennessy (Tii:LVMH), has built its brand dominance (and profits) through diversification, with holdings in wine and spirits, luxury fashion/leather goods, perfumes/cosmetics and jewelry/watches. Notable additions in the last two years are Officine Universelle Buly, a French perfume and cosmetics company, and Tiffany.
Luxury brands like upscale furniture/home goods retailer Restoration Hardware (Tii:RH) are included in a larger group of brands that provide travel, food, dining and other services. Enjoying repeat purchases and customer loyalty, while selling $5,000 dining tables and $8,000 leather modern couches, the brand has established its prominence in the expensive home goods market. RH has utilized exclusivity to its advantage with the transition to an annual membership model, where customers purchase a membership for $100 in exchange for discounts on merchandise. Currently transitioning to a lifestyle brand with plans to develop hotels, restaurants, private jets, and a streaming service centered around architecture and design, RH is spreading its reach.
Savvy car manufacturer Ferrari (Tii:RACE) limits its production quantities to set high prices, creating demand, and building its luxury status by driving scarcity up. Well-positioned for the future, Ferrari’s electric and hybrid cars lineup will account for 80% of its sales by the year 2030. In addition to its foray into the e-vehicle market, Ferrari released its first-ever utility vehicle Purosangue in 2022. With a high price tag ($391,000), and limited numbers, the car will be reserved for an elite following.
Toll Brothers Inc. (Tii:TOL), a US builder known for their luxurious homes, was honored for the eighth year straight as the #1 Home Builder in Fortune magazine’s 2023 survey of the World’s Most Admired Companies.
Tesla (Tii:TSLA), with its unique features and innovative tech, is a newer luxury brand and one that straddles both luxury and a mainstream market. The dynamic electric vehicle company continues to introduce new products, with its Cybertruck pickup due to be out in late 2023. Tesla is enjoying great success with both the Model 3 Sedan and Model Y vehicles currently ranked as two of the 10 best-selling vehicles in the US in a recent study by Goodcarbadcar.net.
There are several companies that have done well designing product lines and services that meet the needs of both the luxury and mainstream markets. Apple (Tii:AAPL), Airbnb (Tii:ABNB), Starbucks (Tii:SBUX), and Nike (Tii:NKE) are all examples of companies that have integrated the idea of serving both kinds of customers with luxury home rentals, exclusive roasteries, and sneakers with limited release numbers.
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