Fashion Updates | luxury

“Power Shift in Luxury Fashion: Brands Adapt to Changing Consumer Landscape”

Published: November 1, 2023
Author: Fashion Value Chain

In the luxury fashion industry, the third quarter is witnessing a notable shift in power dynamics as
global demand for luxury goods undergoes changes and fluctuations. This change is primarily attributed to the evolving consumer landscape. While luxury brands have traditionally catered to the ultra-wealthy, recent trends show that the middle-class demographic is reducing its expenditure on luxury items. This shifting behavior is having a significant impact on the industry.

Kering, the company renowned for owning luxury brands like Gucci, recently reported a 14% drop in
sales for the third quarter, and Gucci, its flagship brand, faced a similar decline. In contrast, brands
like Brunello Cucinelli and Hermes are bucking the trend and experiencing positive results. The difference in clientele appears to be at the core of this discrepancy. The ultra-wealthy continue to spend on luxury items, while the affluent middle-class consumers are showing signs of uncertainty
regarding their ability to sustain such spending.

To adapt to these changing dynamics, luxury brands like Kering, particularly Gucci, are shifting their focus toward top-tier purchasers. Previously, these companies targeted younger, fashion-forward consumers, who are now feeling the impact of inflation and economic fluctuations. Brands are adjusting their strategies and product offerings to cater to high-net-worth individuals (HNWI), as
“quiet luxury” becomes a more prevalent trend.

However, it’s worth noting that investors seem somewhat cautious about Kering’s ongoing transformation of Gucci. To close the valuation gap with competitors like LVMH, Kering may need to
reposition Gucci to align more with conventional luxury imagery.

The luxury fashion industry is navigating a transitional period, and brands are working diligently to
adapt to the changing landscape by targeting the clientele that continues to define luxury in this
evolving market.

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