While LVMH Moët Hennessy Louis Vuitton’s Bernard Arnault remains fashion’s richest billionaire, Inditex founder Amancio Ortega is closing the gap.
In a new report analyzing the Forbes richest list from 2000 to 2024, management consultant Achim Berg writes, “The power dynamics among the wealthy are changing from the polarization that the fashion industry has experienced for years.” It’s a surprisingly accurate allegory.” While it dominates in terms of the number of billionaires and the net worth they generate, the premium and mid-market segments are under pressure. ”
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In fact, Ortega has amassed $20 billion in wealth in the past six months, as Inditex and its flagship brand Zara go from strength to strength, even as LVMH’s stock price slumps amid a global recession in the luxury goods sector. did.
Berg, who recently left a 24-year career at McKinsey & Company to become an independent luxury goods advisor, said that when considering total global wealth, fashion billionaires’ net worth share is 4% higher than it was in 2000. They found that the increase will increase from 10% to 10% in 2024. Top 200.
Achim Berg
His analysis ranks fashion as the “third largest wealth generating industry” after technology, finance and investing. The average wealth of fashion billionaires this year was $44 billion, compared to $31.8 billion for other industries.
In fact, the number of fashion billionaires in the top 200 has increased from 9 with a net worth of $51 billion in the 2000 ranking to 14 with a net worth of $617 billion in the 2024 ranking.
Arnault’s market capitalization as of March last year was $233 billion, Ortega’s was $103 billion, and Fast Retailing’s Tadashi Yanai was a distant third with 43 billion euros. (However, as of October, Arnault’s net worth had fallen to $155 billion, while Ortega’s net worth had increased to $123 billion, Berg’s analysis shows.)
Other fashion billionaires whose net worths have increased “fairly consistently since 2000” include Nike co-founder and chairman emeritus Phil Knight. Alain and Gerard Wertheimer, major shareholders of Chanel. François Pinault, founder of luxury goods group Kering, and Stefan Persson, whose father founded H&M and remains the Swedish company’s largest shareholder.
Berg noted that European fashion billionaires accounted for 81% of this year’s cumulative net worth, while Asia and North America each accounted for just 9%.
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Notable billionaires from Asia include Shein founder Sky Xu, who made the 2024 Top 200 list for the first time, while North America’s richest people include Michael Rubin, founder and CEO of Fanatics. Included.
Citing HSBC data, Berg said the luxury goods sector has seen strong profit growth since the coronavirus pandemic due to “unprecedented price increases”, with profits increasing by an average of 52% since 2019. pointed out.
Meanwhile, Inditex’s innovative business model has enabled the Spanish retailer to create a “thriving group of brands” that includes Massimo Dutti, Bershka and Pull & Bear.
In an interview, Berg elaborated on the study and the outlook for the industry.
WWD: Bain & Company estimates that HSBC has lost about 50 million customers to its customer base due to what it calls “greedflation,” a sharp rise in the prices of luxury goods. Do you think the extreme wealth amassed by today’s fashion giants could further alienate customers who are already fashion-insensitive?
Achim Berg: Over the past decade, the luxury goods industry has grown significantly in size. It’s become part of everyday life, and I think it’s widely accepted that the families behind these luxury businesses are doing very well as a result.
I think we’re starting to hear a lot more about tech billionaires who are in the spotlight more. That’s probably because the personal lifestyles of many of the (fashion) billionaires on the list are less publicized or aren’t considered particularly extravagant or flashy. For example, no one knows what Mr. Ortega is doing.
WWD: The incredible value and wealth created since 2000 has come despite multiple global crises. How resilient do you think the different levels of fashion are, such as luxury, middle class, and mass fashion?
AB: Value creation takes place in many different areas, but luxury goods and sports are overrepresented. The mid-market was a very difficult place for many people, but clearly not for Inditex.
Even 10, 15 years ago, Inditex had a business model with shorter lead times, less inventory, and more innovative ways to allocate inventory. And this competitive advantage appears to be true even today.
You could also argue that Shein has some kind of next-level innovation in place, which is reflected in the very rapid growth and reported profitability of the business. This is a business innovation that connects manufacturers and customers directly and ships directly from the country of production.
Among luxury brands, I think it’s fair to say that the LVMH group and other investments from the Arnault family have led to massive value creation. They have built models for over 75 different brands and appear to be strengthening themselves not only in how they enter the market and develop management talent, but also in how they successfully acquire and develop brands.
WWD: How do you explain that Europe, which has a much smaller economy than the US or China, produces the majority of today’s fashion billionaires?
AB: When we talk about high-end luxury that only exists in France and Italy, it’s not even a broader European phenomenon.
I recently discussed this with a luxury goods executive, and he told me that the combination of a love of royal palaces, art, and a glamorous lifestyle has created a culture of luxury. Other European countries had courts, but the Germans were too Prussian to truly indulge in luxury. I think it’s a similar story for Scandinavians. This perhaps explains why extravagant wealth creation is primarily a French and Italian phenomenon.
WWD: One of the old sayings about American fashion is, “If you dress someone who goes to work in a limousine, you’re going to ride the subway, but if you dress someone who goes to work in the subway, you chauffeur them around.” There is something that says, “You can go.” limousine. Isn’t this true anymore?
AB: I think outstanding wealth can be created at any price point and in any product category. But what this study shows is that luxury goods is a fully established industry benefiting from a growing middle class and a certain excitement about hedonism. I think in today’s world, accomplishments are celebrated with a lot of luxury goods and luxurious lifestyles through social media.
WWD: What do the top fashion billionaires have in common?
AB: There’s definitely something to business model innovation…it’s not just great execution.
Most of the businesses are family owned and in that sense they have a more long-term perspective. When it comes to luxury goods, you need to take a long-term view as they require a very high investment. Brands need to be built, and stores and in-house production require significant capital investment.
WWD: Are you at all surprised that the digital and e-commerce revolution hasn’t created more billionaires, or is that reflected in the rankings?
A..B: No. Rising inflation and rising interest rates in 2022 led to a major revaluation of the industry, with the stock prices of many highly valued digital companies down 80-90%, with only a partial recovery . that.
Many of these digital businesses were focused on growth and market share rather than revenue. And since August 2022, things have changed. This is because in order to get a higher valuation, many companies need to make profits.
WWD: Do you have any predictions for how wealth creation and rankings in fashion will evolve in 2025?
AB: We have shown great resilience over the past 24 years. As such, we believe these companies will continue to be resilient no matter what challenges they face in the coming years. And when we compared[fashion billionaires]to the performance of tech investors and tech entrepreneurs, we even found that they outperformed them on some KPIs and scale.
People will continue to wear clothes. I think there is a reckoning in luxury at the moment that is not only cyclical, but partly structural. However, the long-term outlook for luxury goods is very positive as the middle class continues to grow and rewards for accomplishments for ourselves and our loved ones will continue. So I don’t think luxury will ever go out of style.
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