THE LAP OF LUXURY

AFTER A STRETCH OF UNPRECEDENTED SUCCESSES, THE LUXURY GOODS MARKET IS RUNNING OUT OF GAS — BUT TECHNOLOGY CAN SPEED THE REFUELING

- BY ANNE-FRANCES HUTCHINSON

Luxury is heritage. It is artistry, excellence, and unbridled expression threaded with shimmering legacies that echo through time, seasons, and the invincibility of change. Legendary maisons such as Dior, Hermés, Chanel, Givenchy, and Gucci display their provenance in every stitch, line, and curve of the goods they craft, and their high net-worth clientele take great pride in their fealty to beloved brands.

These days, despite their strong and celebrated roots and passionate devotees, luxury fashion houses are facing new pressures in a rapidly evolving world.

From 2019-24, the personal luxury goods market experienced a speedrun of voracious demand supported by an abundance of supply. Industry analysts foresaw a continued glide into a future of unencumbered value creation supported by a carefully metered embrace of digital technology.

The pandemic was an accelerant; while other industries were in survival mode, the sales of luxury clothing, leather goods, watches, and other accessories seemed unstoppable. Record-setting profits, largely fueled by price increases, drove the sector's 5% annual growth rate. As they often do, times changed in an eyeblink.

According to the McKinsey and Business of Fashion report on the current state of the industry heading into 2026, for the first time since 2016 (excluding 2020), luxury value creation is expected to create less value than the previous year. Growth is stalling and is expected to languish between 1 and 3% through 2027.

A collision of factors, including a more diverse client base, a growing demand for luxury experiences in travel and wellness, and prices hitting the ceiling have put pressure on companies to meet their clients’ stratospheric expectations of quality, innovation, and cachet.