Sector desk · Publishes in week B of the cycle

11

Consumer, Retail & Luxury

Pricing power, inventory turns, and aspirational versus staple demand.

Consumer, Retail & Luxury — Meridian62 sector poster

Analysts

Natalia HanksMEng Chemical Engineering · Imperial College London
Felicitas JantschBSc Management · ESCP Business School
Martina LandoBA Cultural Heritage · Ca' Foscari University of Venice

Equities covered this term

OR.PA L'Oréal Groupe
LVMH.PA LVMH
CFR.SW Richemont
NESN Nestlé
KER Kering

Weekly notes

2 notes on the record

When this desk publishes
Week of 2 November 2026 Equity Richemont · CFR.SW

Affordable watches are driving the Swiss export recovery

By Natalia Hanks, Felicitas Jantsch, Martina Lando · Consumer, Retail & Luxury desk

What happened

Swiss watch exports recorded a fourth consecutive month of growth in September 2026. Cumulative exports for the first nine months of the year reached CHF19.5bn, up 2.7% from the same period in 2025 [1]. However, the recovery was uneven. Exports to the United States rose 85.7%, while Japan and Hong Kong increased 12.3% and 3.0% respectively; China declined 14.2% and the United Kingdom fell 5.2% [1]. Moreover, the increase was concentrated in more affordable and steel watches. Watches priced below CHF500 recorded the strongest value growth, at 39.5%, while steel watches increased 13.0% in value and 21.5% in volume [1]. By contrast, precious-metal watches saw volumes decline 1.0%, despite a 1.3% increase in value [1].

What people are missing

The key question here is whether these figures are a result of stronger underlying demand or simply a recovery from last year’s weak comparison. The Federation of the Swiss Watch Industry attributed the sharp increase in US exports to a favourable base effect, meaning that September 2026 is being compared with an unusually weak September 2025 [1]. It is crucial to note that the industry remains below its pre-trade-disruption level. August exports increased 9.1% year on year to CHF1.79bn, yet remained 8.9% below August 2024 [2]. The US, the industry’s largest market, was especially far from its previous level: exports were CHF197.5m, down 38.7% from August 2024 [2]. The composition of growth further complicates analysing the industry recovery. Volume growth was driven primarily by steel and other-material watches, while precious-metal volumes declined. The strong performance of watches below CHF500 is consistent with greater resilience in more accessible price segments, although export statistics cannot prove that consumers are becoming more price-sensitive [1]. The more defensible conclusion is that the recovery is being led by accessible products and selected markets rather than by a broad return to high-end luxury demand.

Why it matters

Swiss watch exports have returned to year-on-year growth, but have not yet returned to 2024 levels. By comparison, Bain estimated that global personal-luxury spending fell from €364bn in 2024 to €358bn in 2025, while McKinsey expects luxury watches to grow by 2%–4% between 2025 and 2027, below its 4%–6% forecasts for jewellery and leather goods [3][4]. This suggests that Swiss watches are benefiting from a partial recovery in shipments, especially in the US, rather than from a universal return of luxury-goods demand.

What we are watching next

The key question is whether the next export releases show continued growth after the favourable US comparison fades, and whether higher-priced and precious-metal watches begin to recover in volume [1]. If growth spreads from steel and more accessible watches into the high-end segment while China stabilises, the recovery will look more demand-driven. If not, September’s figures may have reflected mainly inventory rebuilding and supply-chain normalisation.

Sources

  1. Federation of the Swiss Watch Industry — Swiss Watch Exports Statistics (August 2026)
  2. Federation of the Swiss Watch Industry — Monthly Statistics (August 2026)
  3. Bain & Company — Finding a New Longevity for Luxury
  4. McKinsey & Company — The State of Fashion: Luxury 2025

Meridian62 notes explain what is happening and why. They are not investment advice and do not recommend buying or selling anything. Read the disclaimer.

Week of 12 October 2026 Equity LVMH · LVMH.PA

Chanel and Dior are rebuilding luxury's lower price rungs

By Natalia Hanks, Felicitas Jantsch, Martina Lando · Consumer, Retail & Luxury desk

What happened

Chanel and Dior have added an expanded selection of smaller handbags, clutches and wallets-on-chain priced below €4,000 to their latest collection store deliveries [1]. Iconic flagships like the Chanel Classic Flap and Lady Dior retain top pricing, but the lower-priced additions mark a shift following years of steep price hikes. Between 2016 and 2026, the retail price of the Medium Chanel Classic Flap rose from $4,900 (€4,351.94) to $11,700 (€10,391.36), a nominal increase of 138.8% [1]. Accounting for a cumulative US inflation rate of 39.57% over the same decade, inflation explains $1,939 of the $6,800 increase, representing a real, inflation-adjusted price jump of 71.1% [2].

What people are missing

Introducing sub-€4,000 products is not a price cut on flagship models, but a mechanism to rebuild the lower rungs of the luxury price ladder without undermining its top-tier exclusivity [1]. For years, brands relied on aggressive price hikes to drive revenue and margins without increasing physical production volumes, pushing prices beyond consumer perceptions of value and scarcity. The new smaller formats serve two different financial functions: an offensive customer acquisition tool to capture younger consumers and build long-term customer lifetime value, and a buffer to prevent existing clients who reject repeated price hikes from leaving the brand ecosystem entirely.

Why it matters

This positioning allows Chanel and Dior to occupy a strategic middle ground between entry-level luxury and scarcity-driven brands. Competitors like Prada offer entry points as low as €850 for its Re-Edition 2008 nylon mini-bag, and LVMH-owned Fendi lists its Tube Flat Wallet at €790, while Hermès relies strictly on high barriers and scarcity with its lowest entry point around €2,750 [3]. By expanding intermediate options, Chanel and Dior avoid damaging resale confidence through direct price cuts while shielding sales volumes against broader industry pullbacks, even if lower-priced goods carry smaller profit contributions — some risk of cannibalization of higher-margin flagship sales remains.

What we are watching next

The key test will be whether expanding entry-level pricing options successfully re-engages aspirational buyers without weakening average transaction values across the portfolio. We are watching Chanel’s next financial disclosures and LVMH’s Fashion & Leather Goods organic growth figures to see if sub-€4,000 offerings drive genuine net customer acquisition or simply accelerate internal cannibalization of higher-margin flagship bags.

Sources

  1. Chanel Limited & LVMH Moët Hennessy Louis Vuitton — Retail store catalog inventory listings and corporate financial updates
  2. US Bureau of Labor Statistics — Consumer Price Index (CPI-U) historical inflation data (2016–2026)
  3. Prada S.p.A., Fendi & Hermès International — Official e-commerce regional catalog price lists

Meridian62 notes explain what is happening and why. They are not investment advice and do not recommend buying or selling anything. Read the disclaimer.

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