Luxury brands are known for their high markups, often charging eight to 12 times the cost of production, which has traditionally enabled them to achieve operating margins well over 30%. These brands operate in the realm of Veblen goods, where higher prices can actually enhance their desirability, signaling rarity and exclusivity. However, the luxury market is currently experiencing significant challenges. Despite a 60% increase in prices since 2019, the sector faces a downturn, partly due to reduced spending by Chinese consumers amid economic instability.

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