As someone who has spent years navigating the ever-changing landscape of luxury fashion, I must say that the current luxury slowdown is proving to be a fascinating study in resilience and adaptability.
2022 has been challenging for the luxury fashion sector as many prominent brands struggle to maintain financial stability amidst a volatile market. For instance, Gucci, previously a significant contributor to Kering’s revenue, experienced a 20% decrease in earnings during the first half of this year. Similarly, LVMH’s shares dipped by 5.2% due to missed financial targets for the second quarter. Burberry faced a steep drop of 22% in retail sales, while Balenciaga and Alexander McQueen reported a 7% decline, and Saint Laurent saw a 9% decrease
To put it bluntly, the outlook is bleak.
How can luxury fashion brands dig themselves out of financial hardship during these uncertain economic periods? According to the retail insights platform EDITED, the recipe for success involves a balanced mix of continuity, affordability, attractiveness to Generation Z, and strategic partnerships
As a gamer, I’ve got some exciting news to share! In the world of high-end fashion, Prada and Miu Miu, owned by The Prada Group, have been on an incredible winning streak this year. They’ve reported a whopping 17% increase in net revenues for the first half of 2024!
This year’s Lyst Index has identified Miu Miu as the world’s most sought-after fashion brand, driving numerous profitable trends among Gen Z. Led by Miuccia Prada, Miu Miu has been instrumental in reviving the ballet flat trend, reintroducing the tie-up silhouette in Fall 2016 and emphasizing the ballerina shape throughout subsequent seasons with the aid of its popular influencers such as Elle Fanning, Mia Goth, Emma Corrin, and Hailey Bieber. Additionally, Miu Miu’s micro mini skirts introduced in Spring 2022 have sparked a series of imitations, with styles like the £890 GBP (approximately $1,172 USD) marbled denim version and a £2,200 GBP (approximately $2,898 USD) slubbed canvas iteration selling out rapidly and being restocked multiple times
Miu Miu is a brand that consistently delivers popular, youthful, feminine fashion styles, and as Gen Z’s spending power grows, so does their financial success. However, they are mindful of those who can’t afford high-end items like a £890 mini skirt. To attract new customers, Miu Miu has wisely broadened its offerings to include bag charms and accessories priced between approximately $399 USD and $1,047 USD. This strategy helps establish connections with budding luxury shoppers early on. Similarly, Prada maintains affordable prices for its Re-Nylon collection to keep younger consumers engaged while raising the prices of other items
It appears that brands like Burberry have encountered disagreements with their customers over pricing strategies. As reported by EDITED, the starting price for Burberry’s handbags has risen significantly in the past year, reaching its highest level in three years with an approximately $223 USD increase. This trend is concerning as luxury spending decreases, and some brands are choosing to focus less on attracting aspirational consumers. Experts suggest that designers are raising prices to create exclusivity for a wealthier demographic, who tend to be older and less affected by economic difficulties. Despite Burberry’s aim to position itself as a more upscale label, the 22% drop in revenue suggests that this strategy may not be resonating well with consumers, particularly as they adjust to creative director Daniel Lee’s contemporary vision for the brand
Similar to Prada and Miu Miu, Moncler has also seen growth, reporting a 10.5% rise in earnings during the first half of this year. This surge was fueled by a 6% increase in sales in Asia, along with robust tourism spending in mainland China. Remarkably, this growth occurred even as online demand for luxury goods in the region dropped by 72%. Additionally, Moncler’s most popular items sold out online in China rose by an impressive 89% during that timeframe
The key is Moncler’s reliability. Operating under Remo Ruffini’s leadership for the last 11 years, the brand has consistently churned out a product offering that blends outdoor functionality with metropolitan suavity. Between 2022 and 2024, outerwear composed 40% to 45% of the label’s collections online, and their color stories were almost always predictable, with black accounting for 33% of the imprint’s SKUs. While neighboring luxury labels fail to gain momentum in China, Moncler can rely on consumer loyalty despite an overall tightening on luxury spending. Amid today’s slowdown, a proverbial saying might prove to be the most sound advice: If it ain’t broke, don’t fix it.
In the ongoing dance of fashion’s musical chairs game, high-end brands are experiencing transformative periods under fresh leadership, with Gucci being one of the most prominent examples. Sabato De Sarno took over from Alessandro Michele last year and has significantly reshaped Gucci’s design philosophy since then. Instead of the flamboyant style associated with Michele, De Sarno has introduced a more subdued, elegant era for the brand, characterized by monochromatic designs that have largely replaced patterned clothing. This shift in production has seen a 91% decrease in the rate of new designs year over year. Moreover, De Sarno has introduced a new burgundy color called “Ancora,” which now dominates 12% of new handbags compared to just 5% in previous collections, and tops have become the second most popular category following footwear. Despite the luxury market slowdown, the minimalistic design approach of De Sarno has yet to significantly boost consumer demand, particularly as Michele’s dedicated followers begin exploring other brands that offer his signature eccentricity (such as Valentino)
De Sarno can share his unique Gucci interpretation by working together with other brands, a strategy that has flourished for luxury companies during tough economic times. Gucci itself has found financial success through collaborations with brands like adidas, Balenciaga, among others. As collaborations have become an integral part of many brand’s business strategies, it is essential to make them strategic to prevent losing the excitement they generate
Finding a way to thrive in an economic slump that’s squeezing luxury spending isn’t always straightforward, but Miu Miu’s youthful, trend-setting approach and Moncler’s unwavering consistency offer useful examples. Instead of trying to create something entirely new, brands should focus on their unique strengths to achieve success – or at the very least, survive – during these challenging times
You can locate the detailed version of EDITED’s initial piece on the web, which provides a deeper exploration through their Retail Intelligence Platform
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2024-09-05 22:09