The luxury industry isn’t just experiencing a downturn—it’s facing an existential crisis. The “great luxury slowdown” of the past 12 months has exposed a fundamental flaw in how luxury brands have been defined and positioned. Something unprecedented is happening: consumers are rejecting the very premise that luxury is simply a sliding scale of niceness correlating to price.
The crisis isn’t about tariffs or economic headwinds. It’s about authenticity, purpose, and the erosion of what once made luxury truly special.
The Collapse Prediction Isn’t Wrong—It’s Inevitable
Critics predicting luxury’s collapse understand something many boardrooms have missed: specialness and profit-driven growth cannot coexist forever. When publicly traded luxury companies become indistinguishable from any other growth-focused corporation, the magic dies.
The danger isn’t that luxury will disappear—it’s that brands operating under outdated principles will become irrelevant while others who understand true luxury will thrive.
The Bernard Arnault Revolution: Lessons Lost
Bernard Arnault’s transformation of LVMH offers a masterclass in luxury strategy, but most brands have only adopted half the playbook. Yes, Arnault made luxury accessible to the “technically affordable” market—the $800 t-shirt demographic. But the genius wasn’t in democratizing luxury; it was in his hype machine philosophy.
Arnault understood that runway shows losing money wasn’t a bug—it was a feature. He treated them as advertising budget, not profit centers. He hired controversial designers like Alexander McQueen and John Galliano, not despite their radical vision, but because of it. The goal was to create emotional experiences comparable to great theatre.
Most luxury brands today have forgotten this lesson. They’ve kept the accessible pricing but abandoned the dream-making.
The Definition Crisis: What Is Luxury, Really?
The household names want you to believe luxury is a vertical sliding scale—H&M at the bottom, Gucci at the top. This definition serves the biggest brands because it makes luxury a contest they can win through marketing budgets and retail footprints.
But this definition is destroying the industry.
Here’s the truth: All luxury companies are businesses with extra time and money. Your brand identity is determined by how you choose to spend both.
Utility companies like Target/Uniqlo/McDonald’s put all of their resources into cost optimization. A luxury brand charges premiums specifically to have excess resources. The question isn’t whether you have these resources—it’s what you do with them.
Case Studies in Authentic Luxury Identity
The Row: Presence Over Virality
The Olsen twins’ brand hosts runway shows with no video allowed, inviting only dozens of people. Business consultants call this suicide—shows must be “digital first” to justify costs. But The Row understands something profound: true luxury experiences can’t be commodified through social media.
When everyone yearns for just one runway show where people sit quietly together, present with music and clothes, a brand has created something irreplaceable.
Maison Margiela: Craft Over Efficiency
The Replica line involved finding vintage pieces and recreating them exactly as new garments. The manufacturing challenges were enormous—unknown fabric compositions, mysterious dye processes, endless trial and error. It was inefficient, expensive, and absolutely essential to Margiela’s identity.
Jacquemus: Sensory Luxury
Some Jacquemus stores feature dressing room walls made entirely of horsehair—a material that can’t be rushed or mass-produced. It’s a tactile experience anyone can have by simply visiting the store. This isn’t about exclusivity; it’s about creating moments of wonder.
The Modern Luxury Paradox
Today’s luxury brands face a fundamental choice:
Option 1: Compete on the sliding scale of niceness
- The biggest stores in Dubai Mall
- Flat-screen TVs playing runway shows on loop
- Volume-driven growth strategies
- Inevitable commoditization
Option 2: Define your unique luxury identity
- Thoughtful allocation of excess resources
- Experiences that can’t be replicated
- Stories that create an emotional connection
- Sustainable differentiation
Why Most Luxury Brands Are Failing
- Misallocated Resources: Spending excess time and money on conventional marketing rather than brand-defining experiences
- Fear of Inefficiency: Avoiding projects that don’t directly drive sales, missing opportunities to create irreplaceable brand equity
- Metric Obsession: Measuring success through traditional business metrics rather than cultural impact and emotional resonance
- Homogenization: Following competitor strategies rather than developing authentic brand identity
The Path Forward: Five Principles for Authentic Luxury
The luxury brands that get back to basics and focus on the following five principles will win.
1. Embrace Purposeful Inefficiency
Stop optimizing everything. Your excess resources exist to create experiences and products that wouldn’t make sense for mass-market brands. The “inefficiency” is the luxury.
2. Invest in Unmeasurable Experiences
Create moments that generate emotional response but can’t be captured in spreadsheets. These become your brand’s cultural capital.
3. Support Craft and Artisanship
Whether it’s Chanel’s Métiers d’Art or a brand developing custom fabrics, supporting traditional craftsmanship creates stories that resonate across generations.
4. Prioritize Presence Over Reach
Not every brand moment needs to be photographed, posted, or monetized. Some of the most powerful luxury experiences happen in intimate settings.
5. Tell Stories Worth Retelling
Your brand identity should be rich enough that employees, customers, and industry insiders naturally share stories about your company’s values and practices.
The Real Question for Leadership
The critical question facing luxury brands today: What is a brand’s luxury identity beyond its visual aesthetic?
This isn’t about pricing strategy or market positioning. It’s about how brands choose to spend their excess resources. It’s about what experiences they create that no other brand can replicate.
The brands that survive this slowdown won’t be those with the biggest marketing budgets or most accessible price points. They’ll be the ones that remember why luxury existed in the first place—to create specialness that transcends commerce.
The Choice Ahead
The luxury industry doesn’t need another sliding scale competitor. It needs brands brave enough to define luxury on their own terms, to invest in experiences that may not drive immediate sales but create lasting cultural impact.
Customers aren’t just buying products—they’re buying into a vision of what luxury means. The question is whether brands have one worth buying into.
The great luxury slowdown isn’t a market correction—it’s a reset. The brands that emerge stronger will be those that remember luxury isn’t about having more money than your customer. It’s about having more imagination.