Zhang Jingyi wears the Burberry Castleford trench coat
Zhang Jingyi wears the Burberry Castleford trench coat
Image: Alasdiar McLellan

In times of crisis, we tend to “go back to basics”. We lean into nostalgia and simplicity, hoping that it might alleviate some of the burden, or pressure, in the case of luxury brands faced with declining fortunes. This is true for Burberry, where observers are looking closely at chief creative officer Daniel Lee’s rebrand — with its traditionalist, more pragmatist approach — to see if it delivers a bounce-back for a brand whose fortunes seem to be in free fall.

Burberry recently fell out of the FTSE 100 (the index of the most highly capitalised blue chips on the London Stock Exchange) because of a declining share price. This comes amid a slowdown in luxury fashion that has also seen the fortunes of brands such as Kering’s Gucci fall quite dramatically. Third-quarter sales at Kering — which also owns Balenciaga, Saint Laurent, Bottega Venneta and others — are down by a whopping 16% overall, which is larger than the 11% previously predicted. Gucci sales were worse yet, falling 25% compared with the same period last year, as Kering struggles to revive its flagship label. 

Forbes reported that “Luxury market leader LVMH just delivered disappointing results for the third quarter with organic growth across the group down 3%. Coming off 2023 when revenues rose 14% to $93.4bn, quarterly revenues have sequentially slowed from 3% growth in first quarter, and 1% in the second.”

Most significant is a 5% drop in LVMH’s fashion and leather goods business, which accounts for around half of the group’s revenue. It’s a segment that includes brands like Louis Vuitton, Christian Dior, Loewe, Givenchy, Fendi, Marc Jacobs, Celine and others.

It’s pretty obvious that, across the board, the luxury fashion downturn is not sparing many of the legacy brands, and optimism is in short supply. McKinsey & Co and Business of Fashion (BoF) have just released their “State of Fashion” report for 2025, and it’s not looking good. Not from the perspective of executives in the sector, only 20% of whom expect conditions to improve. A whopping 41% expect that things might remain the same, while 39% say it is likely to get worse for an industry in the clutches of a slowdown some say could be worse than what we saw during the 2008/09 global economic downturn.

Geopolitical instability and the economic volatility are expected to continue affecting consumer sentiment, but it doesn’t end there. Shoppers are overwhelmed with the sheer amount of choice, which affects discovery, engagement, and therefore conversion rates online. McKinsey and BoF’s report signals that this might change due to artificial intelligence (AI) and the opportunities that might bring, but it’s anyone’s guess whether the fatigue can be reversed by yet more options for discovery.

Our Legacy installation space at SKP-S Chengdu
Our Legacy installation space at SKP-S Chengdu
Image: Supplied / Our Legacy Instagram

After years of rising prices, especially during the post-pandemic boom, which drove luxury growth in 2022/23, consumers are also adopting cost-conscious behaviour. According to HSBC, luxury prices today are more than 50% higher than before Covid. Key styles are even more expensive. An example of this is Louis Vuitton’s Speedy bag, which has doubled in price. Consumers see this as greed on the part of luxury brands, and are switching off or finding better, more affordable alternatives. This is fuelling growth where consumers see value for money, largely in resale and off-price items. Smaller brands that offer consumers high value are also benefiting. Swedish label Our Legacy is a case in point.

Vogue Business said: “Our Legacy was founded in 2005 in Stockholm by friends Jockum Hallin, Christopher Nying and Richardos Klarén. The brand has boomed in the past three years, thanks to a growing community of fans across the US, Korea, the UK, and beyond. Sales have grown 80% year on year since 2021, reaching €30m in [the 2023 financial year to end-June], according to the brand.”

LVMH Luxury Ventures recently acquired a minority stake in Our Legacy, something seen by industry observers as quite significant at a time when high-end brands are struggling to keep up with a market that is changing at a rate that many cannot keep up with. Brands like Our Legacy are benefiting from eschewing trends, and building a cult-like following of consumers who appreciate high-quality clothing at affordable luxury price points.

The luxury slowdown that is likely to continue into 2025 probably signals fatigue with high-end, high-visibility brands that don’t seem to offer consumers much beyond a legacy brand name at increasingly unjustifiable prices. While “going back to basics” might prove beneficial for the likes of Burberry, something tells me it might take much more than that to get consumers back on board. 

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