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While both cities are facing economic uncertainties ranging from the impact of Brexit to the economic hit of the Covid-19 pandemic, London has a more dynamic economy. The rise of London over Milan is a less straightforward story and might reflect a progressive weakening of Milan’s status rather than a strengthening of London’s role, says Godart. Since 2000, LVMH and Kering between them have acquired or bought stakes in more than 10 leading luxury brands. “Paris is still taking a lot of advantage from its last 20 years of mergers,” says de Jorí. Analysts say these conditions provide fertile grounds for M&A, with market consolidation to the benefit of the biggest players. The Covid-19 pandemic has since accelerated luxury polarisation, with high-performing companies weathering the storm while smaller players struggled.
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In 2019, the world’s 10 largest luxury companies, led by LVMH and Kering, increased their share of industry revenue, accounting for 51 per cent of all sales by the top 100 companies.
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New York is losing traction economically, partly because of the US-China trade war, says IFDAQ co-CEO Daryl de Jorí. “The competition with London was fierce, but now that London is out, Paris is going to be the de facto economic capital of the EU,” he says. Paris is likely to reap the benefits of Brexit, including faster European Union integration and less competition from London, according to Frédéric Godart, co-CEO of IFDAQ and associate professor of organisational behaviour at INSEAD. These factors take into account infrastructure, GDP, brand presence, wealth, consumption power and creative power. IFDAQ Global Cities Consumer IPX (Index), exclusive to Vogue Business, evaluates global cities according to four dynamic-weighted key factors, including general economy, fashion economic performance, market capitalisation and industry influence. The likelihood is that London will rise to third place, surpassing Milan, the research says. Paris is expected to overtake New York to become the number one city for relevance and potential in the global fashion industry by 2025, according to IFDAQ Global Cities Consumer IPX (Index).
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