environment” even as revenue fell 6 per cent. The Middle East accounts for roughly 5 per cent of retail revenue, with Q1 sales in the region down 11 per cent after a strong start to the year.  Meanwhile, while Hermès’ performance remained resilient, executive chairman Exel Dumas acknowledged slower tourist flows linked to the Middle East conflict. The conflict is real. The disruption is real. But so is the question that these press releases leave conspicuously unanswered: How much of this slowdown is geopolitics, and how much is the accumulated weight of decisions made in boardrooms long before the first shot was fired? The geography of convenient narrative  Even by the companies’ own disclosures, the Middle East is not large enough to materially shift global results on its own. The region accounts for only about 5 per cent of Kering’s retail turnover. Even with an 11 per cent drop, the arithmetic impact on total group sales is modest. Meanwhile, LVMH specified that the conflict had a negative impact of around 1 per cent on organic growth for the quarter. None of this analysis diminishes what is happening in the region. Mathew Dixon, partner at DHR Global, himself is measured on the point: “The Middle East region has been the most dynamic international market in recent years and still has plenty of runway for growth,” Dixon told Inside Retail.  LVMH said that the underlying wealth has not disappeared. “There will be a time where we’ll see that coming, probably elsewhere,” LVMH’s CFO Cécile Cabanis said, referring to potential repatriation spending in other geographies. The precedent  The industry’s reliance on external explanations is not new. Over the past two years, the preferred explanations were a sluggish Chinese consumer and US tariffs. Both were genuine headwinds. None fully explained the sector’s uneven performance. “Over the past 24 months, we’ve heard about US-international trade friction and a sluggish Chinese customer. Yet brands such as Ralph Lauren and Brunello Cucinelli, both renowned for their clarity of vision and granular merchandising, have delivered stellar results.” The 60 million missing customers For decades, the growth of the luxury sector has been largely driven by the aspirational middle-class consumers. The luxury boom was driven by Covid-19 revenge spending. However, economic uncertainty over the past two years forced customers to shift their spending to other priorities.  Between 2019 and 2023, several leading luxury houses raised prices by between 40 per cent and 70 per cent. Aspirational buyers discovered that the same brand had repositioned its entry-level price points beyond reach. “The luxury growth model depends on a consumer base that has shrunk by 60 million people in three years,” Mathew said, “which suggests there are deeper issues than just geopolitical unrest.” “The Middle East conflict will largely impact the aspirational customer, whom the luxury houses had pushed away after years of aggressive price inflation.” The risk that commands more urgent attention, he argues, is different in kind: “More worrying is if the HNWI consumer no longer engages with luxury brands in the same way as before.”  None of this is to dismiss the real impact of geopolitical instability. The Middle East conflict has disrupted travel, affected regional sales, and introduced a layer of uncertainty into global markets. “The luxury sector must maintain the perception of demand and desirability. So, when results fall short of expectations, it is easier to fall back on geopolitical challenges than admit a lack of consumer engagement or the product not hitting the mark,” Mathew Dixon said. Further reading: Bain on China’s more selective luxury consumer and what it means for brands