This Week's Obsession: Personal Luxury Brands in Crisis

 

Every year Bain and Company conduct in depth research on the state of the luxury goods industry, and in the past few years it seemed the appetite for luxury goods was insatiable. But this year the sentiment is quite different and for most luxury brands concerning.  

The Findings

While Bain remains optimistic that the current downturn is temporary rather than a long-lasting trend, the underlying message conveyed in the report suggests that the luxury industry is undergoing a significant crisis. On a macroeconomic scale, the industry is grappling with constrained GDP growth, escalating geopolitical uncertainties, diminished consumer confidence, and decreasing disposable income. These challenges are not expected to dissipate soon.

Looking at the luxury goods sector, Bain has identified various weaknesses, such as a lack of innovation, imbalances in supply and demand, declining trust in luxury brands, and stagnant business models that hinder effective responses to evolving market dynamics.

Last week we wrote about some of the issues in the sector that are contributing to the declining trust in luxury brands including ethical and overstock issues which of course, is a big hit on their sustainable credentials. When delving into the lack of  innovation in the sector, it was felt the innovation efforts of the brands are for the benefit of the brand not the consumers. 

Innovation in Luxury 

We believe that adopting alternative models of consumption, is one way in which brands can innovate for the benefit of their consumers. While luxury goods brands have been slow to support rental, many now are now trying their hand at partnerships for retail and repair.  

In 2021, Vestiaire Collective introduced Resale as a Service (RaaS), enabling brands and retailers to incorporate resale into their business models. Renowned brands such as Gucci, Chloé, Courrèges, and Mytheresa are now partnering with Vestiaire Collective to embrace circularity. Other brands are partnering with repair services to enhance their ability to enable customers to extend the lifespan of their products or repair and resell. 

Rental is less attractive to luxury brands as they don't see many of these consumers trading into future customers. Unfortunately, the economics of rental is not attractive value proposition for the effort involved.  

How Co-ownership is a Win for All

Co-ownership is a model that is beneficial to the brands, consumers and the planet.  We buy directly from the brands like any other retailer and once we purchase the piece, we take care of it for it's entire lifetime or until such time it warrants upcycling. Consumers have a more affordable and sustainable way to own and access luxury and of course the planet benefits as we reduce the number of resources used and later destroyed. 

For example if you look at the items, the pricing and the service we offer it's incomparable to anything in the industry.  Available this month are:  

 

 Designer bags from Loewe, Goyard, Hermès, Chloé, and Ermanno Scervino from between £200 and £900 per share.  To learn more about More read out Blog on More Math and visit our How It Work page. 

Sources: Forbes Magazine