My dry summary of where things stand today in luxury fashion
• The concept of what luxury is hasn’t exactly acquired a new meaning, but it’s definitely gaining new layers. Brands are now facing a complex positioning challenge, and when I watch at yet another financial report or investors’ meeting, I realize that the industry still struggles to shift from the notion of “desirability” toward broader definitions. I see that as a problem.
• Fashion was invented to signal status; bluntly speaking, the wealthy created it to distinguish themselves from the poor. The latter, in turn, spent centuries trying to imitate it to gain access to a world that remained closed to them. That status is something many people want to broadcast. However, with the rise of social media—where the image often doesn’t match reality—the true markers of status are no longer clothes and bags but rather real estate, luxury cars, travel, and even silence. Naturally, this affects fashion sales. I wrote about this in an article on LVMH (here).
• This is also why the U.S. market remains one of the most attractive—both based on the numbers in financial reports and the very nature of American consumption. I might expand on this, including a discussion of tariffs and how groups are planning to tackle this issue, in a dedicated article. For now, I’ll just note that the +10% price increase at Hermès is somewhat cunning step — products imported into the U.S. aren’t based on the same price that a customer sees on the label in the store.
• Brands are rethinking their pricing strategies. I noticed that Saint Laurent lowered their bag prices, and similarly, “new” prices among others have slightly tapered off.
• Groups and brands are aggressively cutting costs. We’re seeing it in the closure of unprofitable boutiques and corners, workforce layoffs, and a rollback of marketing. I don’t have inside information on what’s happening in the production chain, but I doubt there’s much more to squeeze there. “Made in Italy” and “Made in France” labels are largely the result of powerful luxury group lobbying, and these countries might be only minimally involved in the actual manufacturing process — most of the real work happens behind the scenes (remember the Louis Vuitton–Romania scandal?).
Are these steps enough? I don’t think so.
LVMH treats the crisis as cyclical (I discussed the difference between cyclical, structural, and institutional crises in this article here), Kering is clinging with a death grip to bags that carry a frankly aspirational character. Hermès is still managing to balance in positive territory—but is their game going too far, to the point of evoking unwanted associations with clientelle type?
That said, I don’t believe that fashion is beyond saving. It requires deeper, structural approaches. And possibly, a different management—one that doesn’t keep unsuccessfully applying old methods to a very new game.