This Week's Obsession: The Dwindling Shine of Luxury Goods

"Current trading appears to be performing worse than the already weak second quarter, which was lackluster. This decline, according to Rambourg, is likely due to the gradual weakening of the Chinese market. Contributing to this is the trend of "luxury shame" in China reflects a growing cultural shift where consumers, particularly the affluent, are becoming more discreet about their wealth and luxury purchases. The Chinese government has been actively discouraging "money worship" and overt displays of wealth. This includes actions like removing social media accounts of influencers who flaunt their luxurious lifestyles.  This cultural shift has significant implications for luxury brands operating in China, requiring them to adapt their strategies to cater to these evolving consumer preferences, including adopting a more "quiet luxury" stance.

On July 2nd, HSBC analysts lowered their growth forecast for the second half of the year from 11 percent to 8.5 percent. Rambourg notes that this adjustment suggests a full-year growth rate of around 5.5 percent for 2024, which falls below the historical average growth of 7 to 8 percent in the luxury sector. Additionally, the July 2nd forecast came before companies released their earnings, most of which were below expectations. Ortelli added that, being a cyclical sector, the current environment is not particularly favourable."

While the sector is cyclical, for some time now we have felt that Luxury brands were pricing the aspirational consumers out of the market.  This was one of the driving forces of why we founded More Luxury Club in 2023.  Price hikes only continued to escalate and then the scrutiny on the luxury supply chain and the cost of goods have many consumers turning away from luxury goods. It makes perfect sense to us that Hermes is bucking the trend due to their customers being HNWIs and so far they have managed to avoid negative press.  We believe Miu Miu (Prada's the parent company) is the darling of Asian Luxury shoppers, and the weak yen has made Tokyo the place for Asian consumers to purchase luxury goods. 

It is clear that some of the problems are existential, economic and geopolitical factors and some our self-imposed.  According to BoF,  the slowdown in demand for luxury fashion may be self-inflicted, too.

Big luxury brands trade on a carefully constructed marketing image that is powered by a heady collision of heritage — soaked in old European social hierarchies — and modern celebrity culture. Key to the storytelling are artfully made claims to craftsmanship, creativity and exclusivity. But this image is fraying.

In recent years, brands have hiked prices far faster than inflation as they target wealthy clients to protect profit margins. This has not only alienated Gen-Z and middle-class customers, who are key to growth, but put pressure on luxury’s core value proposition as shoppers wonder if luxury brands are really worth it.

The sector’s price hikes haven’t come with corresponding product innovation. On the contrary, the luxury industry is currently suffering from a lack of creativity from the top, with several major fashion houses creatively rudderless or transitioning to creative directors who are less inclined to bold aesthetic bets.

In stores, brands have sought to justify soaring prices with ultra-classic styles that customers know they’ll wear a lot. But this has contributed to a pervasive sense of sameness.  This may create an opportunity to lesser known luxury brands to make some headway until the stalwarts can fix the issues with their supply chains and margins. 

While people in Europe overwhelmingly say they buy luxury goods because of their quality for some people buy luxury clothes to feel some sense of ownership and authorship in a chaotic world over what they own and what symbols they can wield for power and control,” adds fashion theorist Rian Phin. “Some people feel compelled by brand storytelling, and I believe everyone buys into luxury because they have an understanding of the cultural power and status — including just wanting to look like a put-together person in their clothes, and the idea of leisure attached to that.”

There are so many reasons we started More Luxury Club, in addition to making luxury more affordable, was to derisk the investment of these items.  By only spending 20% on the item you are able to deploy the capital elsewhere - should you want or need to sell your share - you will find your value retained by our white-glove concierge service and the cost to sell nominal.  We also will keep our community educated as to items they should invest in and those they should not.  

All in all, we believe we make owning and enjoying luxury goods less of a risky proposition.  

We always love the end of the month when we tally the votes for the upcoming Fab5.  This month's voting included woven bags from Alaïa, Valentino, YSL, Miu Miu, Ferragamo and Loewe. Stripes were also in the mix with bags from Fendi, Loewe and Miu Miu.

More Luxury Club's Fab5

Capping off the summer with the quintessential summer bags

Our community's picks for the September Fab5 seem to lean towards totes for carrying summer essentials and they come in all sizes and stripes. In June we reported 

that stripes are the quintessential pattern for summer. And though they once were associated with a sporty aesthetic, stripes have evolved into a chic and sophisticated choice that can make a bold statement without overwhelming your look. They effortlessly add a touch of style without being too loud, unlike other patterns.  Hence why so many of you voted for the striped options! 

Rounding out the five are this year's raffia versions of the Ferragamo Hug bag, after the tabs, which can be undone for easier access through the top, wrap around the body just like one. Perfect for the office or city break weekend. SAINT LAURENT's 'Le 5 à 7' bag in raffia welcomes the sun-rays in style. Perfectly sized for carrying warm-weather essentials like an SPF lip balm and sunglasses, it has strips of soft leather clutching the iconic 'YSL' plaque.

The genius of co-owning summer bags is they don't get used as often as your leather ones.  So spending thousands on these simply makes less sense.  And they're available for the winter sun holidays - all pristine and ready to go. No storage required!  With share prices between £284 and £578 these won't be available for long. 

Love It or 'Hate It' - Furry Bag Trend

Faux fur and shearling are still a hit for Autumn 2024

The current furry bag trend is a reflection of the evolving fashion landscape towards comfort and self-expression. In a time where personal style and comfort are paramount, furry bags strike the perfect balance, making them a popular choice for this season. In summary, the irresistible allure of furry bags in autumn 2024 is their seamless fusion of functionality and style, providing both warmth and a distinctive aesthetic appeal. 

Offering a variety of styles, from spacious totes to elegant clutches, furry bags serve as versatile accessories that effortlessly elevate both casual and formal ensembles. Their versatility caters to a wide range of fashion tastes.

Designers are pushing boundaries with faux fur and shearling, creating pieces that are not only fashionable but also eco-conscious. Top brands like Burberry, Chloé, and Off White are unveiling a diverse range of textured bags on the runways.

While we are not fans of this particular trend, there is a bit of an appeal to certain styles. We like the lime yellow Off White bag with black faux fur trim pictured above. 

This trend does come and go - most recently was trendy in 2021.  So why pay full price only to have it go off trend? 

Let us know if you Love It!