LVMH, the world’s largest luxury group, was the first European company to surpass a $500 billion market capitalization recently.

Some of its leading brands have reported growth rates between 10 percent and 20 percent, despite their size.

Similarly, Hermès hit a 200 billion euro market value earlier this month, making it the eighth-most valuable company on the pan-European Stoxx 600 Index. In fact, many of the other top 10 luxury brands are breaking one record after another.

While the best brands are incredibly successful and create enormous desirability, others are seeing different results. This is especially the case for larger brands that are somewhat “in the middle” — hence “premium” rather than “luxury” — as well as many smaller brands. Their revenues are stagnating or declining, putting enormous pressure on their profitability.

The gap between the top 10 and the others is accelerating at a rapid rate, giving many managers significant headaches on what to do.

This raises the question of if, in today’s fiercely competitive luxury market, there is a space for smaller brands to grow profitably and create significant desirability.

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