Has luxury underestimated its customers' intelligence? An uncompromising analysis by Alessandro Maria Ferreri

After a period of post-pandemic euphoria driven by a thirst for 'revenge' spending, the luxury industry is now facing a reality check. Caught between price inflation disconnected from product value and a structural creativity crisis, high-fashion houses are at a crossroads.

Alessandro Maria Ferreri, founder of The Style Gate and an engineer by training who has worked with major fashion houses, analyses the dynamics of an industry that urgently needs to trade its marketing certainties for a renewed industrial rigour.

Breaking the moral contract

Luxury is not suffering from a simple cyclical downturn. It is going through a “crisis of truth”. While external factors such as geopolitical tensions or declining purchasing power in Asia are often blamed, the problem runs deeper. It is a breach of the moral contract between brands and their customers. To understand how the industry could have alienated its consumer base, from the aspirational customer to the world's wealthiest individuals, one must delve into the complex mechanics of perceived value.

For decades, the sector thrived on a promise of scarcity and exceptionalism. The mechanism broke by courting the masses while demanding the tributes of the elite. “We have moved from a supply-driven industry, where the designer dictated taste, to a demand-driven one, where the consumer has been given the keys to the studio,” observes Alessandro Maria Ferreri. This reversal of roles marks the tipping point of an instability that is now shaking the headquarters on Avenue Montaigne and Via Montenapoleone.

Punitive inflation: breaking the value contract

One of the most documented phenomena of the last two years is the staggering price escalation of 'iconic' items. A flagship bag, whose price could remain stagnant for years, has seen its value double, or even triple, in record time. While rising raw material costs are a reality, they do not explain everything.

To compensate for shrinking volumes, houses have abruptly pulled the price lever. They bet on the blindness of the 'ultra-rich' client and the resilience of the 'aspirational' one. This gamble is proving to be a historic miscalculation.

“There is a semantic boundary that the industry has crossed at its peril: the one that separates 'costly' from 'expensive'. A product is costly when its exceptional quality, rarity and the time spent on labour justify its price. It becomes expensive as soon as a discrepancy is perceived: the quality seems average compared to a price that has exploded. The real shock occurred among the big spenders.

The wealthy client is not a foolish one. He refuses to pay 2,200 euros for a bag he bought for 1,200 euros yesterday, without detecting an ounce of additional added value. These customers know the value of leathers and finishes. By increasing prices without raising the level of excellence, the houses have insulted the intelligence of their best customers,” explains Ferreri.

This trend has led to a systemic erosion of trust. Luxury has ceased to be an emotional investment and has become, in the eyes of a clear-sighted clientele, a simple act of financial predation.

'Mercato' dictatorship and creative exhaustion

So what has really happened? Faced with sluggish sales, luxury houses have developed a Pavlovian reflex: the sacrifice of the Creative Director (CD). We are now witnessing a frenzied 'mercato', a game of musical chairs where employment contracts are consumed in months rather than years. This chronic instability ignores a fundamental law: creativity is not a resource that can be extracted on demand; it is a biological cycle that the industry is desperately trying to industrialise.

“A designer is not a slot machine. You do not insert a token and expect a miracle collection to appear in ninety days,” articulates Ferreri. The relentless pace imposed by the digital calendar, a continuous flow of six to eight annual collections from cruise to pre-collections, has simply eliminated the time for gestation. Deprived of the necessary breathing space to immerse themselves in culture or experiment with materials, CDs are reaching saturation point. This hunger for novelty then produces the opposite effect: a generalised visual standardisation. By trying to occupy every space all the time, the houses end up embodying nothing, nowhere.

Is the systematic replacement of designers a solution or an admission of powerlessness? For The Style Gate's strategist, “It is a symptom of the short-term pressure from shareholders and private equity funds. At the slightest difficulty, shareholders demand a change of face. Yet, recent history proves that transferring a designer from one house to another can worsen the decline. We have examples of designers who moved from one house to another and did worse in their new role. It is crucial to understand that luxury is an industry of long-term infusion. Investors, however, expect an immediate return on capital, forgetting that in this sector, the tunnel is sometimes very long before the light appears.”

Supply chain: awakening of ethics and proximity

Behind the scenes at fashion houses, another earthquake has occurred. Long relegated to the status of an invisible adjustment variable, the supply chain has become the core of a brand's reputational engine. Now armed with social media and rating tools, the consumer demands flawless traceability, turning production ethics into a major intangible asset.

“Transparency has become crucial. Take the case of Loro Piana, recently placed under observation: there is now an extreme sensitivity to human resources management and social responsibility. We are no longer just managing pollution thresholds, but respect for people, decent working hours and the sustainability of training,” analyses Ferreri. For the expert, the model of systematic offshoring has had its day. “Flying a prototype to the other side of the world to save a few euros on labour is ecological nonsense and an operational absurdity. If you impose a collection every three months, your ecosystem of tanners, embroiderers and pattern makers must be within easy reach.”

This necessary responsiveness signals the great return of Italy and France as production sanctuaries. Ferreri, who teaches these issues at the University of Milan, advocates for a permanent migration towards a 'zero kilometre' approach. “The luxury of speed requires physical proximity. When creating the prototype, you simultaneously set the price, the quality and the 'Made In'. Relocating production after this stage means breaking the product's integrity: you alter the materials, you weaken the finish and, paradoxically, you inflate logistics costs.”

Beyond geography, the challenge is one of transmission. For Ferreri, the houses must once again become the “guardians of craftsmanship”. “If we do not establish internal academies to transfer know-how to new generations, we condemn centuries-old manufacturing secrets to extinction. You cannot decently call a product 'luxury' if it is not made in a luxurious way. Without production that lives up to its label, luxury loses its raison d'être and its price legitimacy.”

Segmentation, or return of hierarchy

The 'aspirational' customer, a historic pillar of growth in the 2010s, is the great casualty of the current transformation. Squeezed by inflation that is disconnected from their income, they have deserted the boutiques. To reclaim this lost ground without diluting their prestige, houses are now forced to rethink the very architecture of their offering.

Ferreri observes a necessary return to more intelligent price structures. Since the 'main line' has reached inaccessible heights, we are witnessing a reorganisation of the accessories, beauty and eyewear divisions. The Kering group, by internalising its Eyewear division, has paved a royal road: mastering the production of these so-called entry-level products so that they cease to be mere 'merchandise' and once again become true brand ambassadors. “You may no longer be able to afford the 14,000 euro Chanel jacket, but you can buy the lipstick. It is this organic link that maintains the house's authority on the street,” the expert explains.

Faced with the brutal exclusion of the middle class, the return of 'second lines' is becoming the hot topic in boardrooms. For Ferreri, history is an eternal cycle: “Fifteen years ago, the industry killed off second lines, like D&G or Marc by Marc Jacobs, to centralise everything under the parent brand. This choice created a gaping void. Today, houses realise they have lost a customer who will never be able to cross the threshold of the first line. The 'very low end', cosmetics and optics, must once again feed the 'very high end'.”

The future of the sector will involve creating parallel lines, the luxury scholar points out. Without being a watered-down version of the main collection, these offerings will have to provide strong style content at a 'democratic' price (between 500 and 800 euros). They will target a younger clientele whose budget no longer keeps up with escalating prices, but whose desire to belong remains intact. Every house must now ask itself whether it should create these parallel lines to stay in touch with the population, and not cut itself off permanently from the sociological reality of the market, notes the expert.

'Phygital' experience: schizophrenic customer

The luxury consumer in 2026 is a hybrid. A complex, almost schizophrenic entity, asserts Alessandro. They use digital tools to compare, analyse and uncover the slightest quality flaw, but they cross the threshold of boutiques in search of an emotional charge that the screen cannot provide.

Physical retail must no longer just sell; it must now compete with the convenience of a 'click'. The challenge is above all a question of symbolic distance. “On the web, Louis Vuitton and a premium brand are just a click away. In the physical world, kilometres of prestige separate them. The role of the store is to materialise these kilometres through outstanding service,” Ferreri points out. The sales advisor's paradigm is thus shifting: they are no longer a simple executor of the transaction, but a historian of the house, a guardian of the temple capable of re-enchanting the product for a customer who already knows its technical specifications.

However, this hybridisation creates major organisational frictions. Digital has established bad habits: the customer tries on an item in-store only to purchase it online, seeking a specific variation or for simple convenience. “It is a logistical and human nightmare for the sales force. How can you sustain the structures and motivate the teams if the sale, initiated by their expertise, is finalised on a centralised website?” asks the expert from The Style Gate.

The survival of retail will depend on a complete and transparent integration of processes. The challenge is to transform what is currently internal competition into a fluid synergy: sales staff must be contractually involved and rewarded for their product mastery, regardless of the final transaction channel. For Ferreri, the physical point-of-sale must offer what the algorithm will never possess: a deep understanding of the brand and the irreplaceable vibration of human contact.

Epilogue: restoring creative authority

For Ferreri, the way out of the crisis will not be through accounting adjustments, but through a return to a certain form of intellectual elitism. The industry must stop apologising for its exclusivity and resume its role as a tastemaker.

“We made the fundamental mistake of delegating artistic direction to the consumer by asking them: 'Decide what you want to wear'. But the customer is not a designer. They are not looking for a mirror of their own habits; they expect a luxury house to impose a vision, a look, a boldness that surpasses them,” asserts the founder of The Style Gate. Luxury must once again become a prescription rather than a reaction.

While it is imperative to listen to market variations, the brand must remain the beacon that guides taste, not the reflection that succumbs to the whims of the era. The longevity of the great houses will depend on this ability to restore their creative authority: to be the ones who define desire, rather than the ones who chase it.

This article was translated to English using an AI tool.

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