Some cracks are developing in the luxury fashion marketplace - by Joseph Aquino

For some time now, I have been saying that cracks are beginning to develop in the luxury fashion marketplace. Not a collapse — luxury will always survive — but perhaps the beginning of a correction after years of extraordinary growth, aggressive expansion, and unprecedented pricing power.

Having spent over four decades traveling the world and working with luxury brands, retailers, landlords, developers, and CEOs, I have lived through every type of retail cycle imaginable. I have seen markets soar, crash, reinvent themselves, and come back stronger. And today, I believe the luxury business is entering a far more complicated and uncertain chapter.

For years, luxury appeared unstoppable. Fueled by global wealth creation, explosive Chinese demand, post-pandemic revenge spending, and social media aspiration, major luxury companies experienced extraordinary growth. Consumers willingly paid almost any price to participate in the dream.

But today, I believe the luxury industry is dealing with multiple shifts happening simultaneously.

Yes, the aspirational customer is under pressure, but the challenges go far beyond that.

One major change involves international travel and global spending patterns. For years, luxury shopping districts such as Madison Ave., Fifth Ave., Rodeo Dr., Bond St., Avenue Montaigne, and Via Montenapoleone benefited enormously from international tourism, particularly from Chinese and Russian consumers.

Those travelers often purchased luxury goods abroad because of prestige, product availability, pricing advantages, tax benefits, and the emotional experience of shopping in cities like New York, Paris, Milan, London, or Beverly Hills.

But that dynamic has changed dramatically.

Chinese outbound travel has slowed considerably from its peak years, and China itself has increasingly encouraged domestic luxury spending rather than consumers purchasing abroad. At the same time, geopolitical tensions and sanctions have significantly impacted Russian luxury travel patterns throughout Europe and the U.S.

The luxury industry built enormous momentum around global tourism spending, and now many major shopping capitals are feeling the effects of that slowdown.

At the same time, global expansion itself has become a double-edged sword for luxury brands.

Years ago, consumers traveled to Milan, Paris, London, Beverly Hills, or New York City partly because certain products and flagship experiences could only be found there. Shopping itself became part of the travel experience and the aspiration.

Today, many of those same luxury brands are everywhere.

They are in major malls throughout the world. They are on every important shopping street in nearly every major city. Many brands have expanded into outlet centers, secondary markets, airport retail, e-commerce platforms, and broader distribution channels.

Some luxury labels now offer less expensive product categories specifically designed for wider distribution and accessibility. While this strategy generated enormous revenues and shareholder growth, it also slowly diminished part of the exclusivity that once defined luxury itself.

When everyone can buy the same product almost anywhere in the world, part of the mystique begins to disappear.

Luxury was once about rarity, discovery, and access.

Now, in many cases, consumers no longer need to travel internationally to experience luxury. The world’s greatest brands have effectively brought the luxury marketplace directly to consumers everywhere.

That convenience helped fuel tremendous growth, but it may also have weakened part of the emotional excitement and exclusivity that luxury shopping once represented.

There is also the issue of pricing.

I have personally watched luxury pricing escalate at levels that even wealthy consumers quietly question. At some point, consumers begin asking themselves whether the product is truly worth the increase or whether they are simply paying for marketing, celebrity endorsements, and corporate expansion.

But perhaps the biggest long-term shift I see developing involves the younger customer and how differently they view luxury compared to their parents’ generation.

Previous generations often viewed luxury through very traditional lenses. Owning a Rolex watch, carrying a Louis Vuitton handbag, driving a Mercedes-Benz, or shopping on Madison or Fifth Avenue represented status, achievement, and success. Luxury was about recognizable brands, logos, exclusivity, and social positioning.

But many younger consumers today are thinking very differently.

To a growing segment of Generation Z and younger Millennials, traditional luxury brands no longer automatically carry the same emotional weight they once did. Many younger consumers are less interested in buying what their parents bought simply because it carries a famous label.

Instead, they are increasingly attracted to individuality, authenticity, experiences, and personal identity.

They may spend thousands of dollars traveling through Europe, attending a music festival, joining a wellness retreat, dining at unique destination restaurants, or collecting limited-edition sneakers, vintage fashion, independent designers, or niche brands that feel more personal and culturally relevant to them.

In many ways, younger consumers are redefining what luxury actually means.

To them, luxury may represent freedom, flexibility, wellness, creativity, sustainability, privacy, or experiences rather than simply owning a traditional status symbol.

Social media has also changed everything.

Younger consumers are exposed to global trends instantly. They discover emerging designers on Instagram, TikTok, and digital platforms long before traditional luxury companies even recognize them. They are also highly aware when products become overdistributed, overexposed, or too commercialized.

Ironically, the very success of some major luxury brands may have weakened part of their exclusivity with younger consumers. When everyone owns the same logo, the next generation often begins searching for something more unique and harder to find.

I also believe younger consumers are far more skeptical than previous generations. They ask deeper questions:

Where was this product made?

Who made it?

Is it sustainable?

Does the company reflect my values?

Am I buying true craftsmanship or simply expensive marketing?

That mindset is forcing the luxury industry to evolve.

Today, many luxury brands are no longer simply selling products. They are trying to build entire ecosystems around culture, hospitality, music, art, travel, dining, wellness, and lifestyle experiences because they understand that younger consumers want emotional connection, not just merchandise.

Artificial intelligence is also beginning to reshape the business. From predictive merchandising and inventory management to personalized marketing and customer analytics, technology is changing how luxury companies interact with consumers. But despite all the advances in AI, luxury still depends heavily on something technology cannot fully replace — human emotion, storytelling, creativity, relationships, and trust.

At the same time, luxury brands now face a much more complicated world — one shaped by geopolitical tension, economic uncertainty, changing consumer values, AI disruption, and rising demands for transparency and authenticity.

Still, I do not believe luxury is disappearing. Far from it.

The truly great brands — the companies built on heritage, craftsmanship, discipline, and emotional connection — will continue to survive and thrive long term. True luxury has always represented aspiration, artistry, culture, and storytelling. Those qualities remain timeless.

But weaker brands, overexpanded brands, and brands relying too heavily on hype may face significant challenges ahead.

As someone who has spent a lifetime studying retail streets, consumer behavior, and luxury markets around the world, I believe the smartest companies will be the ones that recognize the shift early and adapt before the crowd fully notices.

Because in the end, luxury is no longer simply about selling products.

It is about selling meaning.

Yes, I continue to practice commercial real estate globally and remain available on a one-on-one basis to share the insights and experience I’ve developed over five (5) decades in sales, retail, branding, management, and real estate. Before entering commercial real estate, I spent my initial years selling housewares on busy New York City street corners and later selling timepieces door-to-door to shopkeepers as gifts or for their personal use, followed by eight (8) years managing health clubs for Jack LaLanne and Bally’s, where I oversaw eleven (11) locations throughout the Greater New York market and lastly forty (40) years working at the highest level of luxury real estate based in New York City and working various markets all over the globe.

My new book, Memoirs of a Watch Salesman: A New York Real Estate Story, shares that journey. I openly share many of my views, techniques, and lessons in selling, branding, negotiations, management, loyalty, relationship building, and the hustle required to survive and succeed through multiple market cycles.

Quite literally, I can walk into a company’s environment, quickly identify where the cracks have developed or are developing, and help steer the ship toward stronger positioning, growth, and profitability. In my forty years advising retailers, landlords, and companies globally, I have seen — and often been part of — nearly every type of business ecosystem imaginable.

Joseph Aquino is president of JAACRES, Manhattan, N.Y.