Redefining Luxury in a Multipolar World
Strategies for Future Ready Brands (A Design Perspective)
By Ali Khan
April 16, 2025
This is a transcript of the presentation from the Monaco Luxury Symposium 6th Ed. (April 2, 2025).

Hi Everyone,

Thank you for your time and this opportunity.

The world has reached an inflection point. The past decade's seismic shifts—from pandemics to geopolitical realignments—have exposed the fragility of systems we once took for granted. Nowhere is this reckoning more visible than in the luxury industry, where the contradictions of globalization have crystallized with dramatic consequence.

There was a time when luxury stood for something transcendent. A Hermès Kelly bag carried the weight of generations of French artisanship. Today, that meaning has been hollowed out. What passes for luxury in 2025 is a paradox.

Let me begin with three data points that frame our discussion:

1. The sector has grown to €362 billion yet 72% of so-called luxury brands now violate more than half of Kapferer's established principles
2. Creative director tenure has collapsed from 7.1 years in the 1990s to just 2.3 years today
3. Emerging markets now account for 65% of growth, yet Western brands control less than 15% of the cultural narrative in these regions

The global luxury industry stands at a pivotal juncture—traditional leaders risk obsolescence by clinging to outdated models, while new players redefine the market’s fundamental premises.

This paradox - financial success coupled with cultural irrelevance - forms the heart of our examination today. We'll analyze four layers:

1. The structural erosion of luxury fundamentals
2. The financial Perversion
3. Emerging market counter-models
4. A reconstitution framework

At the heart of luxury's identity crisis lies a fundamental question: What actually constitutes a luxury brand today? J. N. Kapferer's seminal framework—the closest the industry has to a constitution—outlines 13 non-negotiable principles that once separated true luxury from premium goods. These principles serve as our diagnostic framework. When we audit modern luxury houses against these criteria, the results reveal systemic abandonment of these principles.

While time prevents examining all, some glaring figures jump out:

o Hermès' 4,500 French artisans hand-stitching Kelly bags over 18+ hours versus 72% of Prada's leather goods now made in Turkey/Eastern Europe
o Chanel's 1:1 client ratio (boosting average spend by 30%) versus Gucci's wholesale now accounting for 40% of sales
o Rolex Submariner's 70-year design continuity versus Dior's saddle bag repeatedly "reinvented" for micro-trends

The list goes on as you can see on the screen…

So, when measured against those 13 criteria, we can see who is:

• True Luxury (9+ Criteria): Hermès (12), Chanel (11), Patek Philippe (13)
• Heritage Brands (4-8 Criteria): Louis Vuitton (6), Gucci (5), Dior (4)
• Premium Posers (<3 Criteria): Michael Kors (2), Coach (1)

The data reveals an uncomfortable truth: 72% of LVMH/Kering brands now fail Kapferer's luxury threshold. This isn't evolution—it's a surrender to financialization.

As Japanese denim masters and Chinese guochao brands rise by adhering to these abandoned principles, Western luxury's identity crisis deepens. The path back requires more than nostalgia; it demands recommitment to R&D, craft and design innovation.

Structural Erosion

The luxury industry's abandonment of craftsmanship isn't accidental—it's a calculated trade of cultural capital for short-term profits. What began as a slow erosion has become a hemorrhage since COVID-19, with devastating consequences for European artisanship and brand integrity alike.

• France has lost 28% of its luxury artisan workforce since 2000 (Chambre de Métiers et de l'Artisanat)
• Italy's leather industry shrank by 18% since 2018, with 40% of tanneries closing (Pambianco)
• Post-COVID acceleration: 12% of Italian textile jobs disappeared in 3 years (Eurostat)
So, while the labels boast one thing, the figures tell us something different:
• Gucci has reduced Italian production from 85% to 45% since 2015
• LVMH's Romanian factories produce 38% of "Italian-made" bags (under legal loopholes) with leather defect rates up 40% since offshoring.

The story is the same in distribution and retail: While the Chanel model of 1:1 client ratio leads to a revenue of 18,000 euros/sq ft, Dior’s model of 3:1 client ratio only leads to a revenue of 9,500 euros/sq. ft in comparison, with 15 -20% inventory moving through private sales.

When 58% of luxury's value comes from perceived craftsmanship (Bain 2023), outsourcing isn't cost-saving—it's brand suicide. The few houses preserving craft (Hermès, Chanel, Bottega) now outperform competitors by 3:1 in margin growth. As new luxury powers like China and Japan double down on domestic craftsmanship, Western brands face a stark choice: reinvest in artisans or become glorified marketing agencies.

Financial Perversion

Luxury’s obsession with shareholders over artisans has birthed a zombie economy - brands that trade on heritage while systematically dismantling the very craftsmanship that built their legacies. This is not evolution, but extraction.

• LVMH spent €7B on stock repurchases in 2022—enough to:
o Fund 583 artisan apprenticeships (at €12M each)
o Acquire 14 endangered European tanneries
o Cover 6 years of Chanel's entire craft budget
• Kering's shareholder payouts grew 300% faster than R&D since 2015

All this has a human cost: Average Creative Director tenure has been reduced from 7.1 years in the 90’s to 2.3 years at present. A Master embroiderer now earn less than entry-level PR associates.

A similar collapse has occurred in the education sector where 68% of Parsons/London College of Fashion grads now take non-design roles. The much-publicized hiring of Ludovic de Saint Sernin at Ann Demeulemeester and Rhuigi Villaseñor at Bally failed as both lacked the technical skills required in the high-end atelier.

But nothing speaks more of the ills of a financialized design house than luxury industry's secret discount epidemic—a Faustian bargain between preserving exclusivity and chasing growth. "VIP Private Sales" now move 15-20% of inventory for major houses. Prada's "Made for Outlet" lines now account for 35% of Asia-Pacific revenue. Brands using department stores see:

o 40% higher discount rates than direct retail
o 28% faster depreciation of bag resale values

Parallels in the decline of the luxury industry can be seen in case studies for so many other industries from Hollywood to Pharma. The collapse of the once tech giant Intel applies eerily well to Luxury.

Shrinking Design Vocabulary

Hence it is no surprise that luxury’s creative stagnation has also reached epidemic proportions, manifesting in two equally damning trends:

• The Recombination Epidemic where in 2023, 87% of luxury bags were variations of old archives like:
o Dior Saddle (1999)
o Prada Cleo (2021)
o Bottega Cassette (2020)

The Collaborations, re-editions, and all the variations of kind continue to show a low-risk approach combined with design laziness and a continued extraction of the cache, be it from a culture, artist, internal heritage or another global brand.

This strategy is continuing to force more and more dependency on celebrities to boost product sale in the short term. While K-pop stars like Blackpink front luxury campaigns:

• 0% of their outfits are custom-made by the brands
• 92% of Korean consumers see these partnerships as "transactional" (McKinsey)
• Hybe Corp (BTS's label) now earns 3x more from luxury deals than music

Of course, this issue comes full circle in the hiring of Pharrell Williams at Louis Vuitton. While his LV debut generated 420M Euros in media value, there was 0% increase in leather goods sales with celebrity faces taking 78% of screen time in the 2024 campaigns.

The luxury industry's pivot from master artisans to celebrity influencers represents more than a marketing shift—it's a fundamental betrayal of its cultural contract. Where houses once derived prestige from craftsmanship, they now rent it from pop culture, with devastating consequences for brand equity and creative integrity.

Luxury's celebrity addiction mirrors fast fashion's race to the bottom—just with higher price points. As one anonymous creative director confessed: "We've become glorified stylists for pop stars." The brands that break this cycle will rediscover their cultural authority; the rest will become expensive versions of Revolve.

Neocolonial Narratives in Luxury

The luxury industry's relationship with the Global South has entered a new phase of reckoning—one where the old rules of colonial extraction no longer apply, but the new rules of equitable exchange also remain unwritten. What was once celebrated as "exotic inspiration" is now recognized as cultural strip-mining, with Western brands facing unprecedented pushback from the very markets they once took for granted.

Selective Outrage, Performative Inclusivity and cultural Appropriation are no longer fruitful as they once were and are immediately called out. There is a clear pushback by the Global South with movements like Chinese ‘Guochao’ brands that consistently outpacing European labels in key categories.

But so far, all this has only led to stricter gatekeeping to suppress emerging competitors. For example:

o Vogue’s 28 global editions promote conglomerate-owned Western designers 83% of the time.
o 41% of "independent" articles on BOF cite LVMH/Kering executives.
o 76% of finalists for LVMH Prize become conglomerate contractors within 3 years while only 12% retain creative control over their signature lines.

Serious and urgent issues like sustainability have also been hollowed out through ‘greenwashing’ with only 12% of Luxury brands disclosing full supply chains. Even Chanel does not escape this, with their ‘eco’ collections using only 3% recycled materials.

Ironically, Japan upcycles 90% of textile waste while LVMH burns 12M Euros/year destroying unsold stock.

The Saint-Tropez Stress Test: How Chanel and Dior Define Luxury’s Future

A 2023 comparative audit of Chanel and Dior’s Saint-Tropez boutiques reveals the existential choice facing luxury: cultivate culture or chase scale. These neighboring stores—separated by mere streets but lightyears in philosophy—offer a microcosm of the industry’s divergence.

At Chanel, the 1:1 mandatory client ratio, even with 45-minute queues and a no photography policy results in 30% higher average spend as well as preserve the mystique of an exclusive experience. Compare that to the Mall-ification strategy implemented by Dior, where 3500 Euro Saddle Bag shares space with 90 Euro keychain and the ‘Oblique’ desserts at the branded café dilute exclusivity resulting in 15% lower repeat purchases. The selfie friendly displays attract more influencers than HNWI’s resulting in lower brand perceptions. The numbers speak clearly:

This comparison is important as it debunks the ‘growth at all costs’ myth as well exposes the media complicity in pushing a false narrative. Furthermore, it clearly shows which model builds generational loyalty and which depends on one-time buyers.

Emerging Counter-Models

Luxury’s decline isn’t just self-inflicted—it’s being accelerated by geopolitical shifts. Whether it is the rise of Chinese brands or the thriving creative scene in cities across Africa, there are new models emerging that will one day form the new language of luxury.

Although Japan is politically aligned with the West, it is nonetheless growing in it is influence of on global creative fields including fashion showing an amazing balance of craftsmanship and technological innovation to develop new design language that is leading global fashion.

Solutions

These crises share a root cause: the substitution of real value with marketing narratives. The brands that will thrive are those rediscovering actual innovation—whether in design or ecology—not just its appearance. This paper suggests the following

o Legislative Leverage
 EU Luxury Craft Protection Act
 Mandate craft investment disclosures in annual reports
 Block big mergers
 Close ‘made in Italy’ loopholes

o Education Reform
 State funded craft schools & Craft first curricula
 Student loan forgiveness for grads entering craft fields
 1% revenue tax to fund artisan schools
 China’s new craft schools bypass Western Institutes entirely

o Media Accountability
 Ban Green claims without third party verification
 Vogue must dedicate 30% of pages to independent designers
 Cap celebrity content budgets at 25%

o Reclaiming Price integrity
 Blockchain Price Locks

o Anti-Resale Measures

o Transparent Loyalty
 Artisan Hours labeling
 Blockchain tracing
 Factory transparency and ‘Artisan Marks’

o Creativity
 Limit meaningless collabs and logo heavy design
 Innovative ideas that take risk instead of archive rehashes
 Designer Equity Stakes

o Sustainability
 Binding sustainability laws for luxury
 Absolute (not offset) emissions cuts
 Craft reparations fund for all ‘ethnic’ collections
 Direct proceeds to artisan schools in source countries

Re-thinking Old Taxonomy

To fully understand and define this changing structure of luxury fashion, it is equally important to restructure the way these brands are segmented aesthetically.

Traditionally fashion was divided into Haute Couture, ready to Wear, Bridge and Mass Market before being adapted to meet the contemporary needs in the ‘90’s. This paper suggests a new taxonomy that is better reflective of the globalized world we live in currently.

OLD NEW
Luxury Brands Heritage Brands
Avant-Garde Brands Design-Centric Brands
Contemporary Brands Niche Value Brands
Streetwear Brands Hype Brands
Fast Fashion Trend Driven Brands

The New Taxonomy

1. True Luxury
• Examples: Hermès, Chanel, Patek Philippe
• Adherence: 10+ Kapferer criteria
• Key Traits:
o Zero celebrity creative directors
o 100% in-house production
o Price increases as brand-building (not inflation hedging)
• Case Study:
o Hermès' €9,000 Kelly bags have 3-year waitlists while Gucci's €2,500 Aphrodite bags hit discounts within months

2. Heritage Brands
• Examples: Gucci, Dior, Louis Vuitton
• Adherence: 4-5 Kapferer criteria
• Key Traits:
o "Archive mining" as primary design strategy
o 35-60% production outsourced
o Private sales moving 15-20% of inventory
• Case Study:
o Dior's €3,500 "vintage reissue" saddle bags now made in Romania

3. Design-Centric
• Examples: Rick Owens, Comme des Garçons, Marine Serre
• Key Traits:
o Designer-led (not CEO-led)
o Price irrelevant to positioning (€500 t-shirts to €10,000 couture)
• Case Study:
o Rick Owens' €1,200 dungeon sneakers outperform Gucci's collab-driven models

4. Niche Values
• Examples: Ahluwalia, Reformation, Ludovic de Saint Sernin
• Key Traits:
o Sustainability/Social Justice as core products (not marketing)
o blockchain for material tracing
o Direct-to-consumer only
• Case Study:
o Ahluwalia's deadstock collections achieve higher margins than LVMH's leather goods

Future of Luxury

The Saint-Tropez case study isn’t an anomaly. It is a global pattern. From Shanghai to Lagos, luxury’s future is being decided through three competing models:

The Preservationists (Chanel Model)
The Conglomerate Showrooms (Dior Model)
The New Hybrids (Emerging Market Innovations)

Similarly, the paper identifies six pillars that will form future luxury hubs:

1. Class Tension & Aristocratic Legacy
o Japan: Samurai sword artisans now craft €15,000 eyewear (E.Y.E, Tokyo)
o India: Mughal jewelry techniques revived by Sabyasachi’s €50M haute joaillerie line

2. Indigenous Craft Mastery
o China: Suzhou embroidery drives Shang Xia’s 200% growth
o Nigeria: Adire textile workshops supply Lagos’ Orange Culture

3. Non-Functional Appreciation
o South Korea: Doenjang jars repurposed as €3,000 tableware by Seoul’s Moon Jar Studio

4. Soft Power Infrastructure
o Middle East: Qatar’s 2030 plan funds 100+ craft ateliers to reduce oil dependence

5. Self-Expression Tolerance
o Brazil: Veja’s Amazonian rubber sneakers thrive despite political turmoil

6. Geopolitical Stability
o Vietnam: Silk farms now protected as "national cultural assets"

The Contenders for these future hubs include:

East Asia: The New Epicenter

With China, Japan and South Korea leading the race. And

The Global South Wildcards

Like India, Nigeria and Brazil can be seen as some alternate options.

To compete, European brands must:

1: Adopt “Reverse Colonialism” paying equal percentage royalties to the artisans in Ghana or India as they do in Europe. (currently at 15% versus 3%)
2: Lobby for craft protection rather than de-regulation.
3: Embrace Asymmetrical Growth through small scale, high margin products that encourage in-house, domestic production.
4: Measure value in cultural capital and EBITDA!

The Lesson

Luxury isn’t dying—it is decentralizing. The Chanels and Hermès of the world will survive as cultural institutions. The Diors and Guccis risk becoming heritage-themed amusement parks. The choice isn’t just strategic; it’s existential and demands more than nostalgia—it requires systemic refocus on craft, authenticity, and equitable cultural exchanges. The future isn’t about replacing Paris/Milan—it’s about a new ecosystem where multiple regional hubs redefine luxury together.

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