Status, self-confidence and desire are some of the main driving forces that lead many consumers to believe they can’t live without designer clothes. Especially in the era of social media, where ostentation is an everyday occurrence, the attention to looks has long pushed people toward consumption choices that strive for excellence.
However, in recent years, the focus on looking stylish has quickly shifted towards being financially prudent. Falling revenues of major brands make this trend clear: shoppers are spending less and less on designer clothes, bags and heels, and the fashion industry crisis is more pronounced than ever.
Starting with the COVID-19 pandemic, the economic contraction became evident and the issue of a painful downturn began entering mainstream discussion. With people confined to their homes, physical stores started to struggle and a huge wave of closures worldwide strongly impacted the luxury goods sector.
But, over time, the situation hasn’t really gotten any better.
In the first half of 2025, LVMH, led by Bernard Arnault, incurred a 4% drop in revenues, alongside a 22% slump in net profit. Kering, under the leadership of François-Henri Pinault, faces a similar situation. In the first quarter of this year the luxury group recorded declines of 14%. Its flagship brand, Gucci, has seen sales fall by 25%, a negative trend that coincides with the transition in creative direction after Alessandro Michele. Moreover, current global scenarios and the loss of luxury revenues had a huge impact also on Made in Italy, a sector that has seen hundreds of companies close in the major production centers.
“We live in a time when consumers are saving. Their confidence is at an all-time low. And certainly, recent events in the U.S. administration have not benefited consumer confidence” – affirms Claudia d’Arpizio, Global Head of Fashion Luxury at Bain & Company.
In this delicate context, as well explained in the article “The luxury industry is poised for a deal wave” in The Economist, independent brands are now more than ever aware of how hard it is to survive in an increasingly volatile market. Combining luxury firms under one roof, as recognized by Bernard Arnault, could prove to be a winning strategy to cope with these difficulties.
Moreover, a factor that cannot be overlooked is the quality of manufacturing outputs and the hidden working conditions behind them. A series of scandals concerning well-known brands has tarnished their image by exposing how, in the pursuit of profit maximization, boutique-quality products are underpinned by precarious employment, low wages and severe exploitation.
With consumers more cautious with their expenditures and increasingly questioning whether the products of major brands are truly worth the price tags, how can the luxury sector cope with these challenges?
Carlo Capasa, President of the Italian Fashion Chamber (Camera Nazionale della Moda Italiana), suggests that creativity could be the key to reviving the market. Over time, many maisons have relied excessively on numbers, sales and marketing strategies to guide their collections. On the other hand, it is crucial to recognize that a brand’s creative and artistic strength should come first, while marketing is needed to support and showcase it. Indeed, if fashion is reduced to nothing more than business, it risks to loose the cultural dimension that has historically defined its uniqueness.
Furthermore, brands are required to safeguard the excellence they have long embodied. Consumers are increasingly attentive to the positive impact of their choices, and the luxury sector must rebuild trust with clients who have become disillusioned by unethical practices that fail to ensure product quality.
