From being regarded as one of the global emerging luxury markets with the highest potential for growth (with a highly sophisticated upper social class), less than 3 years ago, Argentina is nowadays marking a worldwide record with the highest number of major international luxury brands closing down their stores and exiting the market.
Fendi, the Italian luxury house owned by LVMH is the latest major international luxury brand to close its store in Buenos Aires, following the exit from Argentina of Louis Vuitton, Armani and Saint Laurent. Local media has been reporting that Ralph Lauren and Cartier are also considering closing down their stores in Buenos Aires.
The drastic measures taken by luxury brands come as a result of aberrant import taxation and duties on luxury goods, the collapse of the local currency and control over circulation and exchange of foreign currency. The socialist, some say communist, measures are paradoxically taken by President Cristina Fernández de Kirchner, former First Lady, herself an aficionado of luxury brands. Daily newspaper Perfil reports that the president allocates an annual budget of 400.000 euros for clothing only – never wears the same outfit or pair of shoes twice and can change her outfit at least 5 times a day.
All the socialist measures have been taking a huge toll on foreign investments and private enterprises, which led to a steep decline in purchasing power. Many of the country’s wealthy have either moved abroad or make their luxury goods purchases exclusively abroad, especially Miami, New York and in Spain (Madrid, Barcelona).
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