Wealthy consumers have become far more choosy and seem positively reluctant these days to breeze out of luxury stores proudly clutching a whole mass of trophy brand carrier bags. Instead of buying out the store, they tend to restrict their shopping to one or two items, albeit very expensive ones. They then often ask the store to deliver their purchases to their homes.

According to one leading French executive, this is one of a series of changes in the way people shop for luxury goods caused by the economic downturn.

All the leading luxury goods companies are adapting to these new trends in customer behaviour as well as the inevitable fall in demand. And while the well-established brands – Louis Vuitton, Chanel, Hermès or Gucci – are keeping their heads well above water, the weaker ones risk sinking if the economy fails to improve soon.

As a quick economic rebound is unlikely, this will probably lead to a new wave of consolidation in an industry that is still very fragmented, but at the same time dominated by a handful of large luxury conglomerates. For the industry leaders, the pressures and difficulties facing smaller rivals are expected to offer a whole string of new acquisition opportunities to enlarge their portfolio of brands and products.

But a provocative report this week suggests merger and acquisition activity in the luxury sector could eventually involve not just the bigger fish eating the smaller ones, but the industry leaders themselves.

While the sector is in the doldrums, Sanford Bernstein analyst Luca Solca has taken time to sketch out “blue-sky” mega-merger scenarios. A mega-merger, for example, between France’s PPR and Switzerland’s Richemont could make good business sense. It would bring them overnight into the same league as LVMH, undisputed king of the luxury goods jungle.

The combination of the industry’s number two (Richemont) with the number four (PPR) would also create an enlarged group with two very strong legs: one in watches and jewellery – Richemont with brands such as Cartier and Piaget – and one in leather goods – PPR with brands such as Gucci and Bottega Veneta.

An added bonus for PPR would be to help eliminate its conglomerate discount. PPR would either sell or spin off its general retail assets just as Richemont recently did with its BAT tobacco interests.

There would, of course, be some problems, not least how such a merged giant would be managed and run in an industry known for the big egos of its family owners and senior executives.

Although there is no evidence such mega-mergers will happen soon, they are not just “blue-sky” concepts. LVMH, for example, last week denied reports it was considering disposing of its wine and spirits business to Diageo.

But even company insiders concede that a disposal of the champagne and cognac units could eventually become a serious option – especially if a tempting opportunity emerged to reinforce the French group’s fashion and leather goods operations.

It would probably not hesitate to bid for Hermès, if the smaller but prestigious French luxury house came on the market.

It would also be interested in a brand such as Prada, even though it would probably think twice before making a move on the Italian group.

Splitting atoms

Anne Lauvergeon is putting the pressure on Siemens. The feisty boss of Areva, the French state-controlled nuclear group, is taking her former German partner to arbitration over its plan to team up with Russia’s Rosatom. This would create a strong rival to Areva, which believed it had no big European competitor.

Areva is determined to enforce the eight-year non-compete clause in the partnership that created Areva NP, the Franco-German engineering joint venture that Siemens is now quitting.

The French group wants to reduce the cost of buying back Siemens’ 34 per cent stake in Areva NP. It also wants the German conglomerate to share more of the financial pain from their pioneering EPR reactor project in Finland that is already almost €2bn ($2.6bn) over budget.

The haggling is likely to take some time and the pressure is hardly expected to ease. In the meantime, however, Ms Lauvergeon is likely to come under pressure after Thursday’s government announcement that Jean-Cyril Spinetta, the highly respected Air France chairman, is also to become chairman of Areva’s supervisory board.

Mr Spinetta has clearly not been put there to threaten Ms Lauvergeon. On the other hand, he is unlikely to allow her the free rein she has enjoyed so far. Government insiders have said Mr Spinetta is there for one purpose. As chairman of the supervisory board, his main task will be to supervise Areva’s wily chief executive.

european.view@ft.com

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