Emerging Luxury Trends and Their Investment Implications

7 trends reshaping the luxury industry's future

The luxury industry is evolving rapidly, driven by changing consumer preferences, technological advancements, and a growing emphasis on sustainability. Luxury has always be an ever-changing business as it aims to offer an exceptional service / product / experience. The range of products and services is wide: jewelry, cosmetics, clothes, cars, travels, food or even events.

The importance for brands to adapt to the new trends

For luxury brands, adapting to new trends is not just beneficial, it is essential for survival and growth in a rapidly evolving market. As consumer preferences shift, technological advancements accelerate, and global competition intensifies, luxury brands must stay agile to maintain their relevance and allure. This heightens the cyclicality of their business, requiring them to adapt not only to economic and business cycles but also to emerging trends to stay ahead of the competition.

Brands that fail to embrace these changes risk losing market share, brand value, and their prestigious status. Successful adaptation to new trends allows luxury brands to strengthen customer loyalty, attract new demographics, and secure long-term profitability.

Moreover, embracing innovation opens up new avenues for creative products and services, helping brands stay ahead of the curve and maintain their exclusivity. In essence, the ability to adapt to new trends while preserving core brand values is what will distinguish thriving luxury brands from those that fade into irrelevance.

The new trends

1. A shift from property to experience

Luxury consumers are increasingly valuing unique experiences over material possessions. This shift reflects a broader societal change where status is no longer solely tied to ownership but to the ability to access exclusive, bespoke experiences. High-net-worth individuals are spending more on luxury travel, wellness retreats, and gourmet dining experiences. This trend is driven by a desire for authenticity and a deeper connection with the world, which luxury brands are leveraging by offering curated experiences that go beyond the product sold.

2. Decline in accessible luxury

Accessible luxury, which refers to luxury products at lower price points, is facing a decline as consumers begin to equate true luxury with exclusivity and rarity. This trend is influenced by a shift in consumer perception, where mass-produced "luxury" goods are seen as less desirable. High-end brands are increasingly distancing themselves from this segment, focusing instead on ultra-luxury products and services that emphasize craftsmanship, heritage, and limited availability. This pivot aims to preserve brand prestige and cater to an elite customer base that values exclusivity over accessibility.

3. Quiet luxury, the new chic

"Quiet luxury" or "stealth wealth" is gaining traction as consumers favor understated elegance over flashy displays of wealth. This trend is characterized by a preference for high-quality, timeless pieces that reflect sophistication without overt branding. It is a response to the growing desire for discretion and a backlash against ostentatious consumption. Brands are responding by focusing on minimalist designs, superior materials, and craftsmanship, appealing to consumers who appreciate subtlety.

4. More technology in the customer experience

The integration of technology into the luxury customer experience is becoming more pronounced. From virtual try-ons using augmented reality (AR) to blockchain for product authenticity verification, technology is enhancing how consumers interact with luxury brands. Online platforms are increasingly offering personalized shopping experiences, virtual consultations, and digital showcases that replicate the exclusivity of in-store shopping.

5. More personalization

Personalization in luxury is evolving beyond simple customizations to deeply tailored experiences that resonate with individual consumer preferences. This trend is driven by a desire for exclusivity and a more intimate connection with brands, as consumers increasingly expect luxury experiences that reflect their personal identity and lifestyle​. It is an operational for companies as it is harder to maintain low operating costs when personalization increases.

6. The second-hand, a new market to conquer

The second-hand luxury market is rapidly expanding, driven by younger, eco-conscious consumers who value sustainability and the unique stories behind pre-owned items. This market offers luxury brands a new avenue for growth, as they can tap into the circular economy by offering certified pre-owned products. The rise of online platforms specializing in luxury resale has further fueled this trend, making it easier for consumers to buy and sell second-hand luxury goods.

7. Sustainability

Sustainability remains a critical trend in luxury, with consumers increasingly demanding eco-friendly practices and transparency from brands. Luxury companies are responding by adopting sustainable materials, reducing waste, and ensuring ethical production processes. This trend is driven by a growing awareness of environmental issues and the desire to align luxury purchases with personal values.

Winners and losers

While some brands are currently emerging as clear winners and others as clear losers, this landscape is far from static. Many companies have launched ambitious strategic initiatives aimed at transforming their business models to better adapt to these evolving trends, suggesting that the competitive dynamics could shift significantly in the near future.

Winners

• Hermes stands out as a clear winner, benefiting from its ability to offer exceptional experiences and ultra-luxurious products. Despite challenging market conditions, Hermes has maintained robust growth, showcasing the strength of its brand and the enduring appeal of its exclusive offerings.

• LVMH is another strong performer, with several of its brands well-positioned to capitalize on current luxury trends. The company is also expanding into new ventures, such as hospitality, which will enhance its ability to offer unique experiences and create valuable cross-selling opportunities across its portfolio.

• Ferrari continues to excel, driven by its highly desirable and ultra-premium products. The brand's association with exclusivity and performance keeps it at the forefront of the luxury automotive market.

• Brunello Cucinelli exemplifies the quiet luxury trend, providing high-quality, understated products that appeal to consumers seeking discreet yet luxurious items.

Losers

• Several brands within the accessible luxury segment are struggling, losing market share or even seeing revenue declines. Notable among these are Kering (particularly with Gucci), Burberry, SMCP (Sandro, Maje, Claudie Pierlot), Tapestry, Hugo Boss, and Ralph Lauren. These brands are facing increasing pressure as consumer preferences shift towards more exclusive, less accessible luxury.

• In the Watches & Jewelry segment, companies like the Swatch Group are encountering challenges, with certain markets proving difficult to navigate amid changing consumer tastes and intensified competition.

Conclusion

The luxury industry is at a pivotal moment, where the ability to adapt to rapidly changing trends will determine the long-term success of brands. As consumers increasingly prioritize experiences, sustainability, and personalization, luxury companies must innovate and evolve to stay competitive.

Those that can seamlessly integrate new technologies, embrace the shift towards quiet luxury, and tap into emerging markets like second-hand goods are likely to thrive. Conversely, brands that cling to outdated models or don’t manage to transform themselves risk losing relevance in an industry that prizes exclusivity and forward-thinking. The future of luxury will be defined by those who can balance tradition with innovation, ensuring they meet the evolving desires of a discerning and dynamic consumer base.