After Apple announced it missed its quarterly sales forecast due to lower iPhone sales in China, the Dow dropped 2.8% and the firm fell behind Amazon, Microsoft, and Alphabet to become the fourth-largest publicly traded company. But it wasn’t just the fruit that felt the burn. Following the announcement, luxury stocks also took a turn for the worse.
CNN reported that shares in LVMH, the fashion powerhouse behind Louis Vuitton and Givenchy, were down 3%. Kering, the fashion conglomerate that owns Gucci (the number-one ranked brand in Gartner L2’s Digital IQ Index: Fashion Global), saw its value drop 4%. Swiss watchmaking groupSwatch, which includes name brands like Omega and Tissot, also lost 3%.
Chinese consumers are a huge force in the luxury market, accounting for 33% of global spend. The importance of Chinese consumers to the luxury market explains the shakeup in stock value, as investors immediately responded to the tech giant’s news. Gartner L2’s Targeting the Chinese Luxury Consumer report examines best-in-class strategies for luxury brands targeting Chinese consumers outside mainland China. Given the question of Chinese appetite for luxury purchases at the moment, creating targeted strategies is all the more important for this demographic. As competition heightens between luxury brands, brands need to ensure that they’re creating specific strategies to target and cater specifically to Chinese consumers.