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Is the luxury market dying?

Numbers don't lie. Since late 2022, traditional luxury has been in decline. Knight Frank's "Global Super-Prime Property Report Q3 2024" shows an 18% drop in ultra-prime property sales. Fashion conglomerates like LVMH and Kering are reporting diminishing returns. And McKinsey's "State of Luxury 2024" forecasts anemic growth of just 1-3% annually for 2024-2027, dramatically down from the 5% yearly growth enjoyed between 2019-2023.

The new experience of luxury

The luxury market isn't dying. It is transforming. Three powerful forces are reshaping luxury as we know it:

Geopolitical realities are changing consumer perspectives. In a world grappling with conflicts in Ukraine and Gaza, extravagant consumption feels increasingly unethical. The display of wealth that once defined luxury now often reads as insensitive or out of touch.

Inflation and rising commodity costs are forcing luxury brands - whether in travel, real estate, fashion, or cars - into a pressing business review. The price increases are reaching the boundaries of what even consumers consider reasonable value.

Consumer values have fundamentally evolved. Deloitte's "Global Powers of Luxury Goods 2024" reveals that 78% of millennials now prefer accessible luxury experiences over traditional status symbols. For Gen Z, this trend is even more pronounced, with 45% of their luxury budget allocated to experiences rather than possessions.

The everyday premium experience

This new approach is transforming every sector of the luxury market

In fashion, we're seeing direct-to-consumer premium brands gaining significant market share by offering exceptional quality at more accessible price points. By eliminating traditional wholesale markups while maintaining impeccable materials and craftsmanship, these brands deliver genuine value. Simultaneously, established fashion houses are evolving by introducing accessibly-priced collections that maintain their design DNA while appealing to a broader audience.

The hospitality sector shows similar patterns, with boutique hotels redefining luxury through authentic, immersive experiences rather than opulent extravagance. Historic buildings transformed into unique accommodations offer premium quality in distinctive settings with personalized service that makes luxury feel accessible without sacrificing excellence.

Even fine dining is embracing this transformation. Michelin-starred chefs are launching secondary concepts that maintain culinary excellence while removing the formality and price barriers of their flagship restaurants. These venues often feature more relaxed environments while preserving the core quality and creativity that earned their reputation.

The transformation extends beyond physical products to how brands communicate. Your entire digita presence – from photography style to music selection in videos, from influencer partnerships to tone of voice – must coherently reflect your premium positioning and authentic storytelling. One inconsistent post can undermine years of brand building in today's connected marketplace.

How to update your luxury brand

If you're managing a luxury brand today, here are the essential steps to remain relevant and adopt the new customer expectations regarding luxury:

  1. Redefine your value proposition. Premium quality does not need to equal astronomical prices. Stop selling status and start delivering genuine value. The new luxury consumer chooses quality and authenticity over badges and logos.
  2. Build direct digital connections. Your customers want to engage, not just buy your brand. Direct channels, such as your own e-shop or social media, give you control over your narrative and customer experience while providing actual data on what they buy and what stories resonate with them.
  3. Create everyday premium experience. Rather than positioning your offerings as rare indulgences, show how they enhance daily life. The most successful luxury brands today are those that consumers interact with regularly, not occasionally.
  4. Incorporate sustainability authentically. Today's premium consumer can spot greenwashing instantly. Environmental responsibility must be woven into your business model, not just your marketing materials. Transparency about challenges shows integrity.
  5. Maintain a consistent brand image. Every touchpoint – from social media to in-store interactions – should reflect your premium positioning. This includes visual language, verbal communication, sensory elements, and the values your brand embodies.
  6. Choose partnerships thoughtfully. Your influencers and collaborators speak volumes about your brand values. Select partners who authentically align with your positioning rather than chasing follower counts.

The future of luxury isn't about exclusivity. It's about creating premium and meaningful experiences, aligned with evolving consumer values, such as desire for transparency and sustainability. They pay more attention to such brand values than previous generations.