The Luxury Industry Must Change to Survive

As someone who advises businesses across multiple sectors—from hospitality to manufacturing—I often find that industries facing structural disruption present the clearest case for strategic reinvention. The luxury fashion industry is now at such an inflection point, as highlighted in a recent Economist article that explores the mounting consolidation among high-end brands and the shifting dynamics reshaping the sector.

This month, Donatella Versace announced her departure as chief designer of the house her family built. Simultaneously, speculation is mounting around potential mergers involving major names such as Prada, Armani, and Dolce & Gabbana. While succession planning is expected, the urgency behind these discussions reflects broader pressures: declining consumer demand, weakening global economic sentiment, and increasing scrutiny over supply chain practices.

According to Bain & Company, global luxury sales fell by 2% in 2024—a trend corroborated by Citi’s credit card data showing a 5% year-on-year dip in the U.S. These are not isolated figures; they speak to an erosion in the aspirational consumer base that has traditionally underpinned luxury growth. Brands like Burberry and Versace, which have long catered to the affluent but not ultra-rich, are feeling the impact most acutely.

At the same time, the power dynamics of the industry are shifting. Three conglomerates—LVMH, Kering, and Richemont—now account for 31% of all global luxury sales, up from just 19% in 2014. These giants benefit from economies of scale, supply chain control, and brand synergy—advantages that independent houses can no longer afford to ignore.

What’s more, consumer behavior is changing. Shoppers today demand more than prestige; they expect ethical sourcing, product authenticity, and demonstrable value. Investigations into labor conditions in Italian workshops and viral content exposing the mediocre construction of high-priced items have begun to puncture the allure of certain luxury products. A Vogue survey from January found that the most common reason for reduced luxury spending was a growing sense that these items are simply no longer worth their price.

The implications are clear: for luxury brands to endure, they must redefine what they stand for. This moment demands more than legacy—it requires vision. Consolidation will continue, but it must be coupled with a renewed commitment to quality, transparency, and sustainability. Only those willing to rethink their business models and reconnect with evolving consumer values will remain relevant.

In an industry long defined by tradition and exclusivity, change is no longer optional. It is a strategic imperative.