The Dot Com Bubble: Luxury’s Version
LVMH recently reported disappointing numbers with sales falling 3%, missing Barclay’s consensus of 2% growth. Their nemesis Kering is doing even worse: sales down 16%, with Gucci struggling to keep customers.
I’ll leave the boring finance talk behind, and focus on product and branding. It’s undeniable that contemporary fashion, from a design standpoint, is no longer what it once was in the 80s and 90s. No one with power cared though; bags were flying off the shelf, and stocks were rising, making luxury fashion’s executives some of the richest men in the world. We went from selling design to selling merch. The once inspiring designers like McQueen became something of the past.
Regardless of the design, as long as the top line continues to climb and investors are happy, the designer’s job is secured. Thus the creative director’s job is merely to create clout for the brand.Case in point: Pharrell at Louis Vuitton, who clearly lacks the skill to create thoughtful designs. That was the case for a long time, until now. The logo bags are no longer selling as well, consumer confidence is falling, the mass has become more careful with their spending. Masterminds like Bernard Arnault (CEO of LVMH) wasted no time firing designers, and the creative director musical chairs began.
Just within a week, Kim Jones announced he’s leaving Fendi while holding onto his helm of Dior Homme. Hedi Slimane departs from Celine, replaced by Michael Rider, and JW Anderson is rumored to be leaving Loewe soon. It’s irrefutable that the big conglomerate is grappling with declining sales across multiple brands, switching designers back and forth in an effort to save growth.
However, these big name creative directors come at a high price, and they’re sometimes difficult to work with (Daniel Lee was allegedly ousted from Bottega Veneta for diva behavior). For decades, their price and behavior were tolerated as the market placed them on a pedestal, exaggerating their talent to god-like proportions. For a few, like Dior’s Galliano, it was true; but for many, it wasn’t. Their power didn’t extend to sales. We have celebrities and modern marketing to thank for that instead. A prime example is Daniel Lee at Burberry, ordained as the knight to revive the brand but who merely revived the knight logo, doing little to help the disappointing sales. The formula of using creative directors as the cult leader is dying.
While the big names were betting on creative directors, some brands took a different route. The Row, created by the Olsen Twins, has become the new favorite of the wealthy. With nearly no marketing, no flashy creative directors (the twins remain ultra-private), the brand has achieved success that big conglomerates would kill for. Recently valued at $1 billion with only four stores worldwide, The Row’s focus on unbeatable quality has attracted loyal customers without spending millions on a Kim Kardashian campaign.
Hermès is another success story, posting recent earnings with 11% year-over-year revenue growth. It’s been the rich mom’s favorite, but has also become Wall Street’s favorite for its incredible resilience during economic downturns, beating peers like Kering by over 20% in terms of growth. Big thanks to Hermes’s ready-to-wear division, which posted 28% annual topline growth in 2023. Nadège Vanhée, who has run the womenswear line since 2015, has never made flashy appearances but has consistently produced exceptional products. The clothes may not be the most exciting, but they’re delectably chic and made with unmatched quality. Customers recognize this, which is why they’re willing to pay a premium despite tough economic conditions.
Chanel, after Virginie Viard’s departure, has gone multiple seasons without a creative director, continuing to release collections regardless. Arguably, the clothes post-Viard are even better than those produced during her tenure. Chanel’s slow process of appointing a new creative director signals they may be realizing that a creative director isn’t necessarily essential.
As the luxury market grapples with shifting consumer priorities, it’s clear that the dependence on star creative directors is waning. Brands like The Row and Hermès exemplify a successful pivot towards substance over spectacle, where quality and understated craftsmanship take precedence over celebrity allure. The Row, with its almost invisible marketing and uncompromising product standards, has built a billion-dollar brand based on loyalty rather than hype, drawing customers who seek timeless sophistication rather than seasonal trends. Similarly, Hermès continues to flourish by focusing on exceptional quality and restrained elegance, becoming a symbol of resilience during economic downturns without resorting to high-profile creative reshuffling. Even Chanel, now intentionally taking its time to appoint a successor after Virginie Viard, seems to recognize that its identity and legacy can endure on the strength of its brand rather than a famous name at the helm. Together, these brands underscore a new era in luxury, where genuine craftsmanship and enduring quality speak louder than the cult of personality.
Featured Image Courtesy of Louis Vuitton