While Hermès reported a robust 13% increase in sales this year, shares for luxury giant Kering, owner of Gucci and Yves Saint Laurent, hit a seven-year low in July, according to k3fashionsolutions. This significant market downturn for a major luxury conglomerate contrasts sharply with other segments of the industry, highlighting a stark divergence in fortunes.
Hermès reported a robust 13% increase in sales this year, while Burberry's shares simultaneously fell to 2020 levels, also noted by k3fashionsolutions. The performance disparity across heritage luxury brands signals a critical juncture. The market is distinguishing between brands that effectively adapt and those that falter, highlighting the challenge of maintaining relevance across generations.
Heritage luxury brands are built on timeless tradition and artisanal production, but their survival depends on rapidly adapting to new consumer values, digital demands, and the booming secondhand market. Brands that successfully navigate this tension by embracing digital transformation, authentic storytelling, and strategic engagement with the circular economy, rather than relying solely on past prestige, are likely to dominate the future luxury market, while others face continued erosion of market share.
The Enduring Challenge: Balancing Legacy and Modernity
Heritage luxury brands often employ multifaceted strategies to maintain their artisanal production while meeting the rising demands of e-commerce, frequently adopting a coopetitive approach, according to research from Ideas Repec. A coopetitive approach involves both collaboration and competition within the market to sustain traditional craftsmanship alongside modern distribution channels.
The dynamic between preserving heritage and integrating digital innovation is explored through case studies of Italian fashion brands like E. Marinella, Brunello Cucinelli, and Manteco, as detailed by Ideas Repec. These examples illustrate how some brands attempt to blend their traditional craftsmanship with innovative approaches to e-commerce and market collaboration. However, the current market divergence suggests a critical failure to extend this adaptive thinking to the booming secondhand market, where a significant portion of 'timeless' luxury value is now exchanged.
Crafting Narratives of Timeless Relevance
Brand narratives promoting 'timelessness,' using messages such as “Always iconic,” “A verified classic,” and “Welcome to your new forever piece,” saw the highest response rates for 68% of campaigns in 2022, according to Persado. The high response rates for 68% of campaigns in 2022 demonstrate the power of emphasizing enduring value and classic appeal in resonating with contemporary consumers.
Such messaging aims to position luxury items as "forever pieces," suggesting lasting quality and style that transcend fleeting trends. While these narratives resonate strongly with consumer desires for enduring value, the simultaneous rapid growth of the luxury secondhand market indicates that younger generations are increasingly fulfilling this desire for enduring pieces through pre-owned items, rather than exclusively through new artisanal purchases. The rapid growth of the luxury secondhand market directly challenges the core business model of many heritage brands.
The Shifting Desires of Younger Generations
Millennials and Gen Z are less loyal to traditional luxury formulas and are not primarily driven by high prices, slick marketing, or unattainable aesthetics, according to k3fashionsolutions. The consumer shift of Millennials and Gen Z being less loyal to traditional luxury formulas reveals a disconnect between perceived brand value and actual purchasing behavior.
Companies still relying on "always iconic" messaging to sell new, high-priced items are fundamentally misunderstanding that Gen Z's pursuit of enduring value is increasingly satisfied by pre-owned luxury. These consumers are trading perceived exclusivity for accessible longevity, a trend highlighted by the struggles of brands like Gucci and Burberry. Heritage luxury brands attempting to appeal to younger consumers through traditional high-price, trend-driven marketing are misreading Gen Z's actual desire for value and authenticity found in the rapidly expanding secondhand market.
Navigating the Booming Circular Economy
The global secondhand market is expected to grow 127% by 2026, which is three times faster than the global apparel market, according to Persado. The expected 127% growth of the global secondhand market by 2026 underscores a significant shift in consumer behavior and market dynamics.
Furthermore, the luxury secondhand market is growing four times faster than the primary luxury market, expanding at 12% per year compared to 3% per year, as also reported by Persado. With this accelerated growth, heritage brands that continue to treat resale as a threat rather than an opportunity are actively ceding market share and relevance to a rapidly expanding, value-driven consumer base. The stark divergence in performance between Hermès and Kering underscores that heritage luxury brands failing to actively integrate with the booming secondhand market are missing the primary channel through which younger consumers are now defining and acquiring 'timeless' luxury.
Common Questions on Luxury's Future
What strategies do luxury brands use to appeal to younger consumers?
Luxury brands can appeal to younger consumers by focusing on authenticity, transparent sustainability practices, and digital engagement beyond traditional e-commerce. Collaborations with digital artists or immersive virtual experiences can attract a younger demographic, offering novel ways to interact with brand heritage without solely relying on product purchases.
How do heritage brands balance tradition and innovation?
Successful heritage brands selectively integrate new technologies while preserving core craftsmanship. This might involve using AI for supply chain optimization or personalized marketing, while still emphasizing the hand-made aspects of their most exclusive products. Maintaining a strong brand narrative rooted in history, such as that of Louis Vuitton's travel heritage, while exploring new materials or digital platforms, helps maintain this balance.
What makes a luxury brand timeless?
A luxury brand achieves timelessness through unwavering quality, iconic design that transcends trends, and a consistent narrative of enduring value. Brands like Rolex, for instance, maintain their status by offering products known for exceptional durability and classic aesthetics, appealing to a desire for lasting investment rather than fleeting fashion.
The Future is a Blend of Past and Progress
The sustained success of heritage luxury brands depends on their agility in embracing market evolution while remaining true to their foundational values of quality and craftsmanship. Brands that adapt to new consumer definitions of value, particularly those found in the circular economy, will secure their longevity.
The current market trajectory indicates that simply relying on past prestige and traditional sales models is insufficient for sustained growth. By Q3 2026, brands like Kering, if they do not significantly pivot to integrate with the booming secondhand market and realign their value proposition with younger consumer desires, will likely continue to face share erosion and a diminishing appeal among the most influential new luxury buyers.
