Burberry recently announced it would be shedding 20% of its workforce – around 1,200 people – as it looked to administer a £60m cost-saving exercise. Operating profits at the fashion house were down a massive 88% to £26m.
They’re not the only ones at the high end of fashion feeling the pinch of an evolving consumer market growing suspicious of the real value they get from luxury labels. The cost-of-living crisis isn’t an issue exclusively for people at the lower end of the salary scale. Individuals with the fatter (Prada) wallets feel the pinch too, and affluent markets like Asia, and China in particular, aren’t buying up western cool in quite the volume they once were.
Brands such as Gucci, Balenciaga, Yves Saint Laurent and Alexander McQueen have all reported struggles in the past 12 months. The tightening of purse strings and the onset of value- and ethically led underconsumption – the trend of prioritising experiences over material possessions – have all led the luxury market to ponder their next move, especially when it comes to a sustainable introduction into wider markets.
When Exclusivity Meets Sustainability
Burberry’s woes aren’t restricted to recent issues, and, bizarrely enough, it was its entry into (affordable) ‘chav’ subculture in the late 90s and early 2000s, when the distinctive Burberry check became commonplace on financially attainable baseball caps, scarves and tracksuits. It became a staple look for D-list soap stars and football hooligans alike.
At the time, bosses at Burberry dismissed the issues of a luxury brand being aligned with the less appealing elements of street culture and suggested they were isolated only to its UK market, a fraction of its wider global business. A storm in a very British teacup? Its profits rocketed but cast it as something of a pariah in the high-end fashion world, where exclusivity is the number one goal.
It was a case of short-term profits versus long-term brand damage that the company has spent the last 20 years trying to repair and reconnect the brand back to its quintessential and traditional esteemed British outerwear roots.
Equally, you only have to look at the rising popularity of platforms like Vinted to understand that the trend for vintage and sustainability also spells bad news for fashion houses. Instead of buying news, people are recycling old items. Vinted reports that, of the high-end fashion brands, top sellers across Europe include Louis Vuitton, Chanel and Gucci. Vinted’s profits in the UK rising a jaw-dropping 330% to £65m between 2023 and 2024 show consumers are well prepared to save money by purchasing pre-loved items.
But premium brands aren’t just the reserve of the fashion world. LVMH is a global giant that owns more than 70 luxury brands that cover fashion but also include the likes of Moët & Chandon, Veuve Clicquot and Dom Pérignon.
Weaker-than-expected performance in the first quarter of this year saw the French HQ’d company lose 8% off its stock market value, retreating to its lowest point in four years, as investors got as nervy as bosses there over the ongoing US-China tariff wars, those two countries being the biggest two markets LMVH serves.
Gen Z’s New Priorities
What may also be a worry is the growing identification of clean and healthy living among an aspirational Gen Z audience whose brands very much hope to be their core customer of the future. Quaffing champagne doesn’t align with their cultural and ethical beliefs, their dwindling disposable income or their desire to take better care of themselves mentally and physically.
That’s right: British drinking culture is on the wane. According to DrinkAware, more than a fifth (21%) of young adults aged 18 to 24 say they now abstain from drinking completely. That’s up from the 14% who claimed to abstain fully in 2017.
It has also become the norm to go to the gym. Individuals now signed up for a UK gym membership are at record levels, with 11.4m of us having a membership (we’d love to see the numbers who actually use them!). Equally, the Gym Group, one of the leading national gym chains, says a survey of its young members aged 13 to 28 showed that more than a third (37%) viewed gym attendance as a social activity, with very nearly half of them (42%) saying they’ve met and made new friends at the gym.
And with that comes the desire to fuel your body with a balanced and healthy diet.
Gone is a generation brought up on meeting at the pub to down pint after pint to catch up with friends or form new relationships. An expensive bottle of champagne or large bottle of Belvedere on ice may have suited some Instagram profiles, but that culture is being eschewed for more frugal or ‘real’ experiences now.
Going out just to drink is becoming less and less popular, so those heading out are seeking experiences. A recent Mintel report suggests competitive socialising at venues that host sports like tenpin bowling, darts, golf, pool and even shuffleboard or retro gaming has risen sharply in popularity, growing by 13% between 2019 and 2023.
Bottles of champagne with protruding sparklers ordered to the table aren’t the places creating excitement in the hospitality world at the moment. Yes, of course they still exist, but a whole generation of people are now growing up seemingly very unbothered about what that look says about them.