2016: annus horribilis for luxury?

We all remember 1992 when Queen Elizabeth II had to confront the divorce of her daugther Ann, the separation of prince Andrew and the outburst of tension between Charles and Diana. The accumulation of so many adverse events earned 1992  the title of annus horribilis for the Queen. When looking at the start of 2016, we may ask ourselves whether 2016 could end up becoming the annus horribilis of the luxury industry. One must notice that this year is showing a rare conjunction of negative factors. It seems that, like clouds, negative factors have been accumulating in the last few years. The combined economic slowdown and anti-corruption campaign in China is not new but is proving to be more enduring than many would have thought. The illusonary revival of Japan prompted by the Abenomics has been short lived. The economic and political crisis in Russia with the depreciation of the rouble has dramatically indented the purchase power and travel freedom of the  wealthy Russians impacting their spending abroad especially in Europe and the Middle East. The terrorist threat in  Europe has discouraged many Asian and American tourists from visitingthe western luxury capitals such as Paris, London and Milan. Brazil, a large promising luxury market not so long ago, is in economic disarray and, with an impeached president, finds itself ill-equipped to turn around the situation. The USA has a presidential election in 2016 and, experience tells us, this is not good for the business. Exchange rates are more volatile than ever and the value of shares has tumbled. No surprise then that 2016 first quarter revenues of all major players in the luxury industry have been lukewarm at best. Hermès +6% has pushed bags to make up for the decline in  all other activities , LVMH +4% shows no growth in fashion and accesssories, Kering (luxury division) +3% is driven  by Saint Laurent while Bottega Veneta is negative and Gucci marginally up. For most of them, without the impact of price increases, there would be no growth at all. Outside France, Richemont has experienced  a decline in sales in the second half of its year ending  March 2016. Prada is suffering and closing stores. Ralph Lauren has reported flat sales for the quarter despite enjoying the benefit of a 53rd accounting week.(US normalized accounting practice). All odds are pointing to the same direction: annus horribilis!!!!But there are reasons to remain optimistic about the future of the luxury industry. The appetite for Luxury is unaffected: those who don't buy today have not relinquished their desire for luxury objects they are just feeling this is the right moment for them to buy. They may be  concerned about their money, many may want to hide from corruption activists, others may feel  too sad to indulge in pampering themselves. But their appetites are still there just withheld and perhaps even more than before. New generations are highly self-conscious, they want to pamper themselves, they want to stage themselves, they  are looking for self fulfillment. They love luxury and they are demanding: they want true luxury. This is a great prospect for luxury. But the future will not be bright for all because when in dire straits some players might resolve to compromise on price and brand image, to try and resist the temporary downturn because they are under the pressure of financial markets. Their capitalization has already suffered. The winners as always will be those who will stick to their ambitious vision and resist compromise and banalization because they know that the future of luxury is not about being less but about being even more "luxury".