Latest global luxury market insights by Exane’s Luca Solca

What do you make of the recent luxury retail developments in Canada? Is Canada the second Australia?
I don’t expect Canada will be much to write home about, as we are seeing a depressed commodity market. Canada – like Australia – is a commodity driven economy.

Which is, in your view, the most appropriate strategy for major brands with a saturated presence in China? Should they close / downsize? (so far we have seen very few closures)

Trim, in case, on the margin. But I would not cut much – rather – I would churn, optimising the locations in the portfolio.

To what extent is the U.S. making up for poor performance in Asia? (if in any way)

US demand has been growing strongly in the past few years. The prospect of rising interest rates and the risk of a stock market adjustment makes me prudent for the future.

How do you see the evolution of Brazil’s luxury market in the next 2 to 3 years?
Not much to speak of. Brazil is dependent on commodities (see above) – the balance of payments is negative – the currency prospects are poor.

Many luxury brands have been fervently opening stores in Egypt, in a yet relatively volatile political environment? What is your take?
I have no view on Egypt – I think this market is largely irrelevant.

What do you think are the 3 main reasons Prada is losing steam?

Poor execution in handbags:
1.Lack of convincing innovation
2.Excessive upmarket move
3.Excessive new retail space weighing heavy on the P&L

Luca Solca is the head of luxury goods at Exane BNP Paribas

Prada store Hangzhou, China