Has Global Luxury Fashion Hit A Bubble?
Posted on 25 April 2016
Whether you call it a bubble or a hiccup, luxury fashion is experiencing head on disruption. Having enjoyed a protracted, seemingly incombustible luxury brand sales surge for several years, the luxury fashion bubble is now plagued with unprecedented disruption on several fronts. Will the balloon burst in 2016?
Not to suggest that any luxury brands are facing imminent demise, however, recent tragic events in Europe contributing to a decline in travel, a strong dollar, downgraded luxury stocks, weaker demand in China, and a subdued U.S. market have slowed luxury sales in a sector that had already been incrementally cooling since 2011. According to leading luxury index analyst Bain & Co., 2016 will be a luxury ebb year.
Along with global market vicissitudes, luxury is being disrupted by new luxury global consumer attitudes and expectations, underpinned by the tenacious values of a new generation of affluents. Fashion industry disruption, as well, is at an inflection point, grappling to fix a woefully arcane distribution, manufacturing and supply-chain system.
Dubbed “thoughtful luxurians” by The Luxury Society, today’s affluent Millennial and younger “thoughtful luxurians” value luxury brands not merely as status symbols, but—in contrast to previous generations—attach resolute social values and corporate social responsibility expectations to their consumption patterns.
To gain insight into the unique changes expected to significantly disrupt luxury this year and beyond, global social media analyst Localspeak benchmarked seven luxury fashion brands in Q1—Chanel, Gucci, Hermes, Dior, Louis Vuitton, Prada, and Burberry—in the enterprise social media intelligence platform NetBase.
The luxury labels in the comparative analysis below reflect a global NetBase language analysis, representing all 42 languages supported by NetBase. These seven luxury labels were among the top 15 luxury brands (fashion and non-fashion) analyzed in a two-year global English-language only NetBase Luxury Brand Passion 2016 Report.
The luxury label rankings in Localspeak’s Q1 global language analysis of NetBase’s top luxury brands English-only study vary. While Chanel’s Q1 global position is on a par with the NetBase 2016 study, Dior, which ranked sixth in the NetBase study, rose in Localspeak’s global Q1 analysis to second place (Gucci took second place behind Chanel in the NetBase passion index study).
Louis Vuitton, which ranked first in NetBase’s 2015 study, falling from top luxury brand to seventh place in the two-year study, is positioned in fourth place behind Gucci in Localspeak’s Q1 global fashion brand analysis.
Significantly, in Localspeak’s global analysis, Louis Vuitton enjoys a 81% sentiment analysis, equal only to Chanel, but surpasses even Chanel with the highest passion index at 94, where the average among the labels analyzed in 82.
Burberry, historically a leader in fashion digital disruption and brand innovation, took a hard fall in the NetBase 2-year overall luxury brand study from fourth to twelfth position. In Localspeak’s Q1 global fashion index, Burberry ranks in fifth position, just behind Louis Vuitton. A reflection of its aggressive digital investments and leadership in aligning corporate imperatives with shifting consumer expectations and values, Burberry’s passion index ranks third with a strong 90 among Localspeak’s seven labels, trailing only Louis Vuitton and Prada, with 94 and 92, respectively.
Another barometer of digital strategy lift is visualized in the Timeline Comparison analyzed in NetBase of potential impressions for each of Localspeak’s seven brands. Testimony to its steadfast global digital marketing acumen and strategic influencer strategy, at the peak of Localspeak’s Q1 social media potential impressions analysis Louis Vuitton took top ranking with nearly 1.5 billion potential impressions, double the social conversation for runner up Chanel.
In order to benchmark prominent themes—nascent over the past couple of years, but now considered disruptive factors and more prescient than ever in luxury fashion, Localspeak analyzed the Q1 share of social media conversations attributed to eight themes, reflected in the Crosstab analysis chart below.
Three of the themes relate to business models: designer resale, online/mobile ecommerce, and the shoppable runway. Two address shifting fashion aesthetics and social norms: genderless fashion and the growth of leisure wear. And three themes examine fundamental shifts in the consumer mindset toward luxury value and corporate social responsibility: ethical fashion, philanthropy and sustainability.
In the Localspeak theme analysis of luxury fashion business models, Louis Vuitton earns a majority of the social conversation for the burgeoning designer resale market; Hermes, at 40%, for online/mobile ecommerce (ostensibly owing to its tenacious reluctance to set up an online shop and the concomitant negative sentiment associated with this heritage luxury fashion icon).
One might expect the online/mobile ecommerce social conversation around Burberry to surpass the other labels in Localspeak’s Q1 Crosstab Analysis. However, Burberry’s ecommerce theme ranking of 18%—trailing Hermes (40%), Louis Vuitton (35%), Dior (35%) and Channel (33%)—isn’t astonishing at all.
Burberry’s vanguard role in prodding luxury fashion into ecommerce—outpacing all the other luxury fashion labels as an online sales earlier adopter and digital innovator—has elevated luxury consumer expectations for seamless online luxury shopping experiences.
In the category of luxury fashion aesthetics, Gucci ranks highest (34%) for genderless fashion traction, followed by Prada, Louis Vuitton and Dior, each of whom earn only about half of the theme discussion, respectively. Burberry, at (34%), ranks highest for leisure wear (followed by Hermes and Prada).
Sartorial responses all to shifting social norms which also hit at the very core of and question formality in the art of dressing.
Remarkably, when it comes to examining luxury consumer values under the lens of social media analytics, the dynamic of luxury fashion demographics has never been more prophetic. To wit, the rise of the thoughtful luxurian and the implications for luxury brand social responsibility.
While ethical fashion and philanthropy remain an abysmally low priority for the brands studied, the social conversations on sustainability associated with Chanel, Dior, Prada and Burberry reflect the avid social concerns consumers have for revamping environmental and sustainability practices in a notoriously toxic industry.
Fashion disruption is woefully overdue. As CFDA (Council of Fashion Designers of America) president Diane von Furstenberg declared last year “We’ve been drinking the same kool aide too long.” The global fashion behemoth is undergoing tectonic shifts—for the good.