When we wrote the Top MBA in Luxury Management in 2012, we took the estimates of Bain & Co , and PWC, and summarized the markets that would see a surge in luxury brand adoption. China was the leader, and the luxury experience industry was customizing their services for the Chinese tourists. Two years reversed the trends. In 2011, the estimates were that the industry would grow at 30% per annum. In reality, the growth fell to 7% in 2012 and 2% in 2013. Although Chinese Govt’s anti-corruption drive were held responsible, Chinese economy was showing signs of fatigue. Consumers tend to cut down on luxury and dining out when they see their disposable income as a temporary splurging opportunity.
In 2011, MBA and Masters Programs offering specialization in Luxury, sensing the trends in China, were proactive when they included learning opportunities in China. When a market that is responsible for half the revenue is hit by a slowdown, the recruiting rates are likely to go down. Strategies are developed and expansion plans postponed. Kering and LVMH have both reported sales slowdown in China and put on hold their plans for scaling up. The influence of Chinese Govt. on spending pattern is phenomenal. An anti-corruption drive has created apathy toward all things non-essential.
MBA programs ranking for Luxury Management specializations are mostly in Europe with the exception of NYU Stern. Schools can customize their learning trips and focus back on Europe and American markets, but the reality is that Luxury is no longer synonymous with Brand name. Schools that have promoted their programs based on their partnership with leading brands like Gucci, L’Oréal, Louis Vuitton and Bulgari would be forced to consider the evolving nature of the market. Consumers are no longer excited by big brands. As the disposable income increased in emerging markets, so did the purchase of products from lesser-known brands. Luxury still means exclusivity and when a larger section of the market is purchasing from the same big brand, exclusiveness of the shopping experience is diminished.
Although marketing and sales of luxury brands should take precedence in MBA curriculum, a shift in consumer purchasing habit from luxury stores to online should also be reflected in the course structure. Sales in E-commerce are a different beast. The customization of the online shopping experience once thought as a prerogative of web designers and online strategists will find their way into the responsibilities of Luxury Goods marketers. MBA programs that integrate e-commerce and online sales strategy into the luxury management curriculum are on the right track.
Schools that are focusing back on Europe are also at greater risk. A drastic shift in consumer sentiments in Europe, and a stagnant economy in US would risk the collapse of the Luxury market. Even in European Luxury stores, Chinese retail tourists played a substantial role in sustaining the industry. Fluctuation of currency in Asian markets is another cause for concern. A higher inflation has a direct impact on the spending patterns of the customer. The devaluation of Yen has badly hit japan, one of the mature luxury markets. In 2012-13, the currency fell by over 23% and it had a direct impact on the profits for leading brands. Despite LVMH increasing their prices by 12%, their profits inched up only by 0.4% from net profit of 3.42 billion euros in 2012 to 3.44 billion euros in 2013.
It is not all doom and gloom as Chinese markets continues to be a major contributor in the luxury market. Since the real GDP growth in China is estimated to cool off at 4% by 2030, a career spanning 16 years in an industry can fetch handsome return. For those MBA aspirants who are looking to maximize the learning value in Luxury markets, a curriculum that integrates Luxury Marketing, E-commerce and Hospitality Management would be an ideal intersection to focus. Schools offering China focused luxury management programs are still valuable as the number of household with $150,000 and above income is estimated to increase from 3,84,000 to 10.3 million by 2030. Estimates have turned out to be wrong, and we suggest that all the numbers be converted to a conservative estimate through a 30-50% devaluation from the number provided by leading consulting companies.
Reference
Chinese Luxury Market Report 2014 - EIU
About the Author
I am Atul Jose, Founding Consultant of F1GMAT, an MBA admissions consultancy that has worked with applicants since 2009.
For the past 15 years I have edited the application files of admits to the M7 programs: Harvard Business School, Stanford Graduate School of Business, the Wharton School, MIT Sloan, Chicago Booth, Kellogg School of Management, and Columbia Business School, together with admits to Berkeley Haas, Yale School of Management, NYU Stern, Michigan Ross, Duke Fuqua, Darden, Tuck, IMD, London Business School, INSEAD, SDA Bocconi, IESE Business School, HEC Paris, McCombs, and Tepper, plus other programs inside the global top 30.
My work covers the full MBA application deliverable: career planning and profile evaluation, application essay editing, recommendation letter editing, mock interviews and interview preparation, scholarship and fellowship essay editing, and cover letter editing for funding applications. Full bio with credentials and admit history is here.
I am the author of the Winning MBA Essay Guide, the best-selling essay guide covering M7 MBA programs. I have written and updated the guide annually since 2013, which makes the 2026 edition the thirteenth.
The reason I still write and edit essays every cycle: a good MBA essay carries a real applicant's voice. Writing essays for F1GMAT's Books and Editing essays weekly is how I stay calibrated to what current admissions committees respond to.
Contact me for school selection, career planning, essay strategy, narrative development, essay editing, interview preparation, scholarship essay editing, or guidance documents for recommendation letters.