The recent announcement of LVMH’s sales growth in Q3 2023 of a mere 1 percent has sent ripples through the industry. Critics, quick to sound the alarm bells, have declared it the impending demise of luxury. And I even got a few emails from brands asking me what to do now.
However, as always, the devil lies in the details, and a closer examination reveals a more complex reality. In my opinion, the luxury sector is far from being written off. Instead, there is a bright promise for the future of luxury, but not for every brand.
Let’s address the elephant in the room: Much of the astronomical growth in the luxury sector during the pandemic was fueled by aspirational clients, stimulus money, and revenge spending. Many, trapped within the confines of their homes during the pandemic, yearned for a taste of the extravagant and sought solace in luxury purchases.
Brands seized this opportunity, relying heavily on flashy marketing campaigns and the opening of new stores to attract these aspirational buyers.
Yet, in their rush to court the aspirational market, many brands lost sight of a fundamental truth: the importance of precision and client-centric brand storytelling and continuing to cater to their best clients. They became entangled in the allure of immediate gains and, in doing so, distanced themselves from their core values and the essence that defined their luxury status.
Now, as the dust settles and the world embarks on a path to a new normal, these brands stand at a crossroads.
Herein lies a concept I’ve come to call “excitingly boring.” It might sound paradoxical, but it encapsulates a critical strategy for luxury brands in these uncertain times. It suggests that, while a luxury brand’s core message and values should remain steadfast and perhaps “boring” in a way, there is an abundance of room for excitement and innovation in how that message is conveyed.
While a luxury brand’s core message and values should remain steadfast and perhaps “boring” in a way, there is an abundance of room for excitement and innovation in how that message is conveyed.
Luxury brands that have endured the test of time — think Louis Vuitton, Chanel, Rolls-Royce, Gulfstream, and Rolex — have mastered this approach. They’ve maintained their forward momentum by staying true to their core values and consistently communicating their brand story. They embody the very essence of “boring” in that they are unwavering in their commitment to their core values.
However, what sets them apart is their knack for injecting “excitement” into their interactions with their audience. Continuously, they unveil new products, services, and experiences that captivate and astonish their clients while staying anchored to their brand narrative. They combine the timeless with the “wow” of the moment to create and inspire cultural capital. This excitement doesn’t entail altering the brand’s essence but rather discovering creative ways to present it to the world.
In the post-pandemic era, the future of luxury brands hinges on their ability to connect with affluent Gen Z consumers through precise storytelling. Sadly, about 95 percent of brands fail miserably in storytelling, as our research shows. And this makes many brands vulnerable to economic swings.
Gen Z, already the most influential luxury generation today, values authenticity, sustainability, and an authentic bond with the brands they choose to champion. Luxury brands that will thrive tomorrow are those that can seamlessly blend their client experience with a modern, client-centric narrative. Brand storytelling and experiences replace heritage. It’s a clear call to action for many brands.
To succeed in this endeavor, luxury brands must wholeheartedly embrace the “excitingly boring” approach. They must reaffirm their core values, emphasize their unique selling points, and consistently communicate a clear and compelling brand story.
Simultaneously, they need to infuse innovation into their product offerings, digital experiences, and customer engagement strategies to capture the ever-evolving tastes of Gen Z. And this is where most brands fail. Instead of trying to give clients something they have never seen before, they play it safe. And playing it safe is playing to lose.
The recent Q3 figures of LVMH’s sales growth aren’t the funeral bell for luxury; rather, they’re the industry’s wake-up call. This is also confirmed by the stellar performance of LVMH’s flagship brand, Louis Vuitton, which still clocked in outstanding results despite the headwinds.
Brands that leaned too heavily on aspirational clients and glitzy store openings are now grappling with the consequences of their shortsightedness. The message to luxury brand managers is crystal clear: Embrace the “excitingly boring” philosophy, stay anchored to your core values, and relentlessly seek inventive ways to engage and inspire your audience.
As the world evolves, so must luxury brands. Don’t be among the 50 percent of luxury brands that will disappear by the end of the decade, as Équité Research estimates. Be among those that drive the luxury sector to new heights. It’s the most exciting time for the industry if brands play to win.