Hot Takes #18: Luxury Is Melting
Matchesfashion, Farfetch, Moda Operandi and the fuzzy future of luxury e-commerce
As digital marketplaces undergo a shakeup, with a sea of sameness contributing to e-commerce shutdowns and savvy shoppers taking their money elsewhere, luxury fashion is in for a rude awakening.
Hot Takes is my bullet point thoughts on fashion's hottest issues. These posts get to the heart of why people are talking about what they’re talking about, what this means and where this could go next.Â
Think: what direction is fashion heading in? What’s new, innovative and exciting? What's going on in fashion that's really pissing people off?
Hot Takes ties fashion topics to a wider cultural and social context, digging into the often more significant meaning behind things.
So sit back, relax and let's get into it. Here’s Hot Takes #18.
Let’s set the scene.
You've all heard the news by now.
Once known as a profitable business with a curated selection of independent designers, luxury e-tailer Matchesfashion was shut down after a buyout by Frasers Group didn't go according to plan.
And according to an anonymous source, a group Zoom of over 300 employees were made redundant effective immediately with no severance packages offered, blocked access to payslips, all access to company cards withdrawn and the future looking uncertain for the remaining employees.
Farfetch sent out a company-wide announcement stating that they were laying off up to 30% of its workforce to "streamline the business" all the while founder and CEO José Neves stepped down, along with other key executives, following the company’s acquisition by South Korea’s Coupang in December.Â
And on top of all of this, Moda Operandi is fundraising and speaking to private equity companies about investing as they look for a little cash boost to get themselves over the line.
It's chaos over in the digital luxury retail space as shoppers become savvier and brands carve out their own spaces online, independent of large luxury e-commerce retailers.
Have we reached peak luxury e-commerce? Maybe yes, maybe no. If one thing is for sure, it's that the instability of digital marketplaces points to fashions uncertain future.
The homogenous luxury market
Luxury fashion and originality used to go hand in hand.
But in an overcrowded and ultra-competitive marketplace, design cues have taken a plunge head-first into a sea of sameness. It's all starting to get a bit boring if you ask me.
Brands are churning out seemingly identical products in a bid to compete with the exclusivity and ethos of Hermès, Chanel, Prada and Louis Vuitton, but this approach is backfiring as creativity takes a back seat to a brand's bottom lines.
Quality is also going downhill, so it's no wonder comment sections on social media are advising shoppers to buy vintage, buy from indie brands, buy archive pieces or shop from rental sites.
Luxury fashion doesn't look the same as it used to as we are stuck in a state of fashion purgatory with bland stock and mass-produced designs running rampant.
The homogenous air that the current luxury fashion market gives off would suggest that in the near future, as consumers bite back and take their money elsewhere, fashion is in for a rude awakening.
Aspirational consumers are priced out
The prices in luxury fashion continue to climb and no one seems to want to do anything about it.
According to data from insights and analytics platform Edited, luxury prices increased by as much as 25% between 2019 and 2022.
Some luxury brands are willing to keep pushing prices higher despite weakening demand as it's every man, or brand, for themselves.
In September 2023, Chanel increased the prices of its high-end products in China after a post-pandemic slowdown in the sale of luxury goods in the region. And in France, a classic medium-sized Chanel flap bag now costs more than €10,000 (or $10,820) for the first time ever.
Hermès is planning on raising prices between 8-9% this year, even as annual sales top $14 billion and the brand is defying the perceived luxury slowdown as sales surged 18% in the last three months of 2023.
It's no surprise then that this market shift is pricing out aspirational consumers who may want to dip their toes in the world of luxury, leaving room for no one but the ultra-wealthy 1% to play the luxury game.
My two cents.
Luxury fashion is melting.
More specifically, a slew of bad e-retailer results, e-commerce shutdowns, and hasty brand details have led to mounting tension in luxury digital marketplaces.
And if you thought the slew of bad luxury e-tailer news was over, think again as Swiss luxury conglomerate Richemont is trying to get rid of its unprofitable e-commerce venture, Yoox-Net-a-Porter, following substantial write-downs totalling €1.8 billion.Â
This one hurts a little bit to be honest as I've worked on and off at NET-A-PORTER and MR PORTER for the last decade, but what's a girl to do apart from hope for the best?
Anyways, there used to be a time when luxury fashion set trends, but thanks to the unyielding influence of the internet and the peer-to-peer, humanised feel social media enables, shoppers are no longer looking to big brand names or retailers to see what they should be wearing.
Instead, it's out with the old and in with the new as the digital luxury fashion sector unravels from the inside out.
As luxury fashion grapples with the challenge of transitioning its operations online while ensuring profitability, a shakeup is needed. But who will come out on top is anyone's guess.
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