Are luxury brands losing popularity?

[EbonyWood]

I’m reading the news of Farfetch being sold, Matches looking likely to be acquired to some degree and reading people’s comments and reactions.

Most people are saying that luxury Ecom is dead, they don’t care to buy luxury fashion anymore and they want to buy less.

Everywhere I see, luxury companies are closing stores, seem to be struggling, discounting a lot. What’s happening? I know lots of people are really struggling right now. But, the rich always seem to stay rich and be able to afford luxury items.

Is everyone just done with buying stuff, luxury or not?

I subscribe to Back Row and they discussed this issue last week.

With 2023 about to end, luxury fashion finds itself at an inflection point. The aspirational shopper is spending less on luxury goods, leaving high-end brands to focus on selling to the ultra-wealthy. While sales grew 15 percent across the luxury sector in 2022, according to estimates from Bain and Company, they are expected to grow around half that in 2023. This led the Wall Street Journal to report recently: “Luxury brands need to find ways to unload their growing pile of unsold stock without reeking of desperation.” MyTheresa told the paper the company was seeing “the worst market conditions since 2008.” We’ve been building up to this moment all year; LVMH CFO Jean-Jacques Guiony had said on an earnings call in July, “The aspirational customer is suffering a bit.”

To make up for the slowed growth of aspirational sales, brands plan to capitalize on their wealthiest customers in a number of ways. One is with jewelry. According to a report from Business of Fashion and McKinsey, the branded fine jewelry market will grow three times faster than the total market from 2019 to 2025, with price points six times higher than unbranded products. Next year, Chanel will open boutiques specifically for top-spending clients. Brands like Bruno Cucinelli are already doing this, and more are sure to follow. “We’re going to invest in very protected boutiques to service clients in a very exclusive way,” Chanel Chief Financial Officer Philippe Blondiaux told Business of Fashion.

In reading all these stories this year, I kept thinking about the book Deluxe: How Luxury Lost Its Luster by Dana Thomas (go subscribe to her Substack). First published in 2007, Thomas laid out the economics of the luxury fashion industry, which evolved from small companies that focused on the highest quality product to huge conglomerates, like Kering and LVMH, focused on making as much money as possible. “Disposable income has risen significantly in industrialized nations in the last thirty years,” Thomas wrote in Deluxe. “Both men and women have put off getting married until later in life, freeing them to spend more on themselves. The average consumer is also far more educated and well traveled than a generation ago and has developed a taste for the finer things in life.”

She continued, “Corporate tycoons and financiers saw the potential. They bought — or took over — luxury companies from elderly founders or incompetent heirs, turned the houses into brands, and homogenized everything: the stores, the uniforms, the products, even the coffee cups in the meetings. Then they turned their sights on a new target audience: the middle market…”



For anyone hoping to gain an understanding of how fashion operates as a business today, the book remains essential reading, something I still hear regularly referenced by people who work in the industry. I called Thomas, who lives in Paris, to talk to her about what’s changed in fashion since she first published the book, and where she sees the industry going from here.

In thinking about how to sum up 2023 for fashion, there was one really big story, which is the shifting demographic of the luxury fashion customer. Now, the aspirational shopper, which you write about in terrific detail in Deluxe, isn’t buying this stuff as much, leaving brands to appeal to the über-wealthy.

Absolutely. The aspirational customer, as I wrote in Deluxe, is vulnerable to economic shifts and economic turbulence. When there's a recession, they stop buying. When times are good, they start buying. And when they buy, they buy a lot, but they buy small stuff that has big markups.

Now, the big stuff has big markups too, as we've seen with the price hikes of the Chanel 2.55 bag. [A medium classic flap bag saw a 16 percent price increase in 2023, from $8,800 to $10,200.] That Phoebe Philo is selling a coat made in Madagascar for $25,000 is just kind of mind-boggling. Luxury brands aren’t giving up on the aspirational customer, but they're not banking on the aspirational customer anymore, because the wealthy customer made so much money during and after the pandemic.

It's not just one thing, a lot of people got into luxury buying during the pandemic and once life started again there wasn't the same amount to spend anymore. The elephant in the room that is the Chinese economy that no one really wants to talk about. War in Ukraine meant no more access to luxury brands for Russian oligarchs, etc. etc. Yes, the very rich won't notice much loss in their spending power but the bulk of luxury purchases is made by people that can just about afford it.

For me, personally, there's been a noticeable flattening happening in fashion where it's all a bit samey. It's becoming more and more obvious the brands are being gamed for profitability by the big luxury conglomerates and it obviously works but creatively, it all feels a bit empty so I'm less interested. Especially online but I do enjoy in store shopping more than I used to, but overall I probably do buy less.

I don't think it's so much as luxury brands losing popularity per se, but it's to do with the nature of retail. Bricks and mortar retailing have seen many a department store go bust and vanish, and it is the turn of the online version - multi brand e-tailers.

With the majority of brands now selling directly to the consumer, multi brand e-tailers such as Farfetch, Matches and Net-a-Porter are largely redundant now. Matches lost its way when The Chapmans (its founders) s sold the company, and now the CEO is formerly of ASOS, you can smell their desperation. A friend whom in the nature of her work deals with Matches says invoices go unpaid for months on it. It will be the next to be either acquired or go into administration.

Another issue, and one that really needs to be considered is that most brands massively over produce stock, and in turn, e-tailers have huge inventories because they don't want to miss out on a sale. It's a simple over saturation of product that there isn't a market for. And in how rapidly prices have risen, its been untenable for some time now. The pandemic/online market place merely speed things up.

I like Matches & shop there a lot for the “cheaper brands” essentially because I feel the high street doesn’t cater for me that much. I do think luxury fashion has got ridiculously expensive, I will spend £300 on sandals but not £800. Farfetch never appealed to me & they were often more expensive. I agree with pp that fashion has become quite homogenous & I don’t find it very inspiring whereas I used to love it.

I just spend far less because there is always something else it can be spent on that’s better value, holidays, dc, saving for dc, etc

A friend whom in the nature of her work deals with Matches says invoices go unpaid for months on it. It will be the next to be either acquired or go into administration.

i’ll be very sad if Matches goes as that’s my main shop.

Wholeheartedly concur with @botemp's post

For me, personally, there's been a noticeable flattening happening in fashion where it's all a bit samey. It's becoming more and more obvious the brands are being gamed for profitability by the big luxury conglomerates and it obviously works but creatively, it all feels a bit empty so I'm less interested. Especially online but I do enjoy in store shopping more than I used to, but overall I probably do buy less.

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I got to the point, probably around the time of the pandemic when I realise I had too much stuff, and not only that, I was rarely tempted by the brands I used to love as it's all variation on the same things. There's no artistic flair or any real identities. Once upon a time, most brands reinvented everything every season. Now, it's just the same styles in different colourways, and reinterpretations of what everyone else is doing. Have no interest in buying into this.

Now, if I buy anything, it's nearly always secondhand/preloved/used pieces that are things I regretted buying during the hey day of luxury fashion - mid-90s to 2010. And if I buy something that is new, I just wait until it goes on sale. Nearly everything these days goes on sale. (Which rather suggests that overpricing/overproduction might be the reason why).

Also will throw in here the outrageous price hike in designer handbags (looking at you, chanel).
It just seems that many are being priced out and there are way too many brands all competing for the 1%’s money!

I have a Chanel bag that’s really old. I would never buy one now, I can’t afford it & don’t want to spend that & see it on loads of others.

I have a Chanel bag that’s really old. I would never buy one now, I can’t afford it & don’t want to spend that & see it on loads of others.

I wish I’d bought one many years ago. Regrets!

Yes, the accessories market definitely has the sense of tulip fever at the moment.

I also echo bunny that my most exciting buys now are vintage, things I missed out on mixed with things I never knew were out there. They somehow feel more relevant to the moment than a lot of what's being marketed as fresh off the runway.

I love finding things that are one off pieces or from tiny brands - especially when travelling. Those pieces are so much more exciting to me than anything designer now.

I have worked in Luxury fashion for many years and have always been interested in clothes and designers. I don’t ever remember feeling this way about luxury fashion before now! My friends in the industry seem to feel the same.

I wonder if luxury resale sites have impacted things? I use vestiaire quite a bit.

I worked in and around luxury fashion for almost twenty years, got bored with it, and retrained to do something completely different. Occasionally I miss it, mostly my clients. Am very glad I do something else now as I don't think I could muster any enthusiasm.

What I find most disappointing is how basic and generic most brands are. All they're doing is slapping a giant logo on things. YSL is possibly the most guilty of this. It's just so boring. Quality has massively declined too. And for me, so has desirability. It's clear others feel similarly.

Hmm... I've been buying second hand and vintage for a long time but, if the luxury brands all go downhill or tits up, then that's going to feed into where I shop and hit me too before long. It's arguably happening already. So I don't see it as a way out.

Luxury has changed. It’s no longer about buying an expensive item from a large faceless corporation such as LVMH. It’s definitely not about in-your-face branding and logos so everyone knows where you bought your stuff from.

Today’s luxury shopper wants to buy from smaller companies which actually care about the product and the workmanship and the planet. Branding is discreet, it’s more about quality and “those who matter, know where you bought it from - and if they don’t know, they don’t matter”.

The trendy brands in the luxury market are no longer LV, Chanel, Gucci etc - they’re The Row, Loro Piana, Toteme etc. Don’t get me wrong, I’m sure LV is still doing well and selling to a certain sector of the market, especially in China and the Middle East. But Western consumers have moved on.

I completely agree that western cultures are shopping those brands - but I feel it’s very much what’s in trend wise right now also. Like ‘Old Money’ ‘clean girl’ vibes (I absolutely hate those term but that’s how it’s described 😵‍💫).

Also, because these brands are less about logos and more about fit and colour, you can find similar pieces at a fraction of the cost in COS, Massimo Dutti etc, making the trend more accessible to the masses. You couldn’t ever do that when the loud prints and heavy logo’s pieces of Gucci/LV/Balenciaga were in, because they quite clearly weren’t the same thing replicated on the high street.

I don’t know anyone in the fashion world who would go and buy a LV bag or a Gucci belt now. It’s just done - but I wonder if those brands will ever make a comeback, like most things do in fashion?!

I'm pretty sure plenty of Western consumers are still shopping Gucci etc yes the Gucci belt is not "the belt" as it was 5 yrs or so ago but many people will still buy it

For me it's the decline in quality. I don't mind paying for something that is high quality, well made and you know will last. Some of my clothes are absolute workhorses and have lasted years and still look barely worn.

Some of the more recent stuff just starts looking a bit sad after a few wears even when washed and dried correctly. Not to mention if you look closely at some pieces there are thread pulls, small marks in the fabric which IMO for the price charged should not be slipping through quality control. It devalues the brand for me and I think I might as well buy a knock off from the fast fashion retailers.

I also like something a bit different or with a bit of flare. So much in stock at the moment is generic and samey.

I like Toteme but they are the brand of the moment and I can't see them eclipsing the big brands

Just because something is called or marketed as luxury doesn't mean it is actually better

Are designer handbags really better quality than no brand name ones for example?

I think people are gravitating towards smaller designers with attractive elements like being made locally/ sustainably/ with natural materials. Pieces that are classic. Overconsumption has become unfashionable.

I thought the fact that designer handbags have increased in price so much was evidence that the luxury fashion market was hale and hearty. Or is the bag craze just an August 1929 style last hurrah before it all goes a bit Pete Tong?

Can’t believe no one has brought this up yet as a consideration but in my opinion fake goods are becoming much more mainstream. Lots of my friends just buy fakes from the sites advertised on TikTok and talk about them in the same way as if they’d bought the real thing. Especially true for the mainstream YSL, Gucci, Chloe, LV bags and shoes that just have logos slapped on. Influencers on TikTok are all over this with links on where to buy. The flashy brands are victims of their own success in this way.

And I should add these are friends in their early thirties, single/no kids, good jobs and plenty of disposable income. They just don’t see the value in shelling out for the real thing.