The Intelligence from The Economist Luxe run out? LVMH
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Jul 31, 2025 
Avantika Chilkoti, a global business writer at The Economist, dives into the challenges facing LVMH, the giant in luxury goods, led by Bernard Arnault. They discuss how shifting consumer behavior and tough market conditions are testing the company’s resilience. Chilkoti also examines the dangerous allure of South Korean dramas in North Korea and the severe risks viewers face. Additionally, the conversation touches on the impact of tariffs on American consumers and how they are linked to a faltering dollar and rising prices.
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LVMH's Growth Strategy
- LVMH under Bernard Arnault grew by acquiring numerous luxury brands, creating economies of scale and massive diversification.
- The company thrived on globalized luxury markets, making Arnault the richest man during the post-COVID boom.
Challenges in Luxury Demand
- The luxury goods cycle is in decline due to falling consumer spending in major markets like the US and China.
- Tariffs create uncertainty and dampen consumer confidence despite luxury firms' large profit margins.
Luxury Pricing and Scandal Impact
- Luxury brands raised prices excessively during the revenge shopping boom, causing consumer pushback.
- Scandals like labor exploitation investigations damage brand trust and customer willingness to spend.