Monday Postcard #204 – Have Luxury Brands Lost their Allure?

Let’s take a trip down memory lane: the 18-year-old me had just started university. I was one of over 4,000 high school graduates starting Business Administration of which only 1,000 would make it into the second year. It was tough. My first three exams were in November, I had a bit more than two months to study thousands of pages, memorise sample questions and do mock exams. I was terrified. Every day I got up at 6am and started studying at 6.30. I gave myself half an hour lunch break and kept studying until 8pm. I did this for the whole first year at university. One thing kept me motivated – and please do not laugh: a picture of a Chanel 2.55 bag.

I had pinned this picture on the wall over my desk. For me, it stood for something. I wanted a successful career, where one day, I would be swimming in money and could afford that bag. Looking back, it was a really superficial goal. But that was just the way most of us were programmed: most of my study peers had similar goals: drive a Porsche before the age of 30, earn USD 100,000 as a starting salary. Status symbols were linked to our success.

And status symbols seem to have become even more important almost 20 years later. Let’s play a game: go into a major city and count the number of Chanel bags, you can spot within 10 minutes. I guess it will be quite a few, if not dozens. The same holds true for any other big brand: the omnipresent Louis Vuitton, Gucci, Dior (due to their rebranding and aggressive influencer strategy) and even the ultra-expensive Hermès. To me, these brands have just become the H&Ms and Zaras of luxury. Judging by the sheer amount of people who own such a bag, it does not really feel special anymore. In October 2021, Chanel announced that it will limit a “One-Bag-per-Year-Policy” which means that customers cannot buy more than one bag or small leather good per year. An attempt to reinstitute some exclusivity?

Over the years, my life goals – fortunately – changed. Up until today, I still have not bought the Chanel bag. This is not because I did not make the necessary money, it just somehow lost its allure. If I spend more than USD 3,000 for a bag, do I want to be like every other woman on the street who has exactly the same bag? Do I want to look like the army of influencers these brands hire? I rather not.

Why did I want a Chanel bag in the first place? In the late 90s and early 2000s Chanel stood for craftsmanship and tradition. I personally also admired Coco Chanel, because I bought into the brand’s story that she freed women with her designs. While I do not want to diminish Chanel’s influence on women’s fashion (especially making trousers fashionable for women), she was only a small part of the women’s liberation movement. Furthermore, I read multiple biographies and learned that she may have been a spy for the Nazis. And there was one more story:

One of my secretaries in Shanghai got a Chanel bag in 2013. She proudly showed me and I asked her at which fake market she bought the bag. Suddenly her smile vanished and she got really angry. “Do you think I would buy a fake?!” She stomped out of the office and did not talk to me for a week. I was surprised – I really did not mean to offend anyone but at this point in time, fakes were all the rage in China. Furthermore, how could a secretary afford such a bag? (Side note: foreign luxury products are even more expensive in China than they are in Europe or America due to luxury taxes which can result in triple the original price). I apologized to her and asked without trying to be nosy how she could afford that bag. “I live with my parents, I only eat plain rice and I take the bus instead of the subway because it is cheaper. I have saved for over ten years.” I was shocked. “Why would you go through all of that for a bag? Why not travel with that money?” “Because I love it. A trip is over when I am back home, everyone can see that I own a Chanel bag.”

Initially, I thought this was a phenomenon in fast-growing countries like China. For decades, communism did not allow any unique fashion style and with the country becoming more developed and richer, I thought it was a creative outlet and appreciation for goods which used to be inaccessible. But soon I observed the same trend in Europe. Every time, I walked by a Louis Vuitton store, there was a long line. The queues were not limited to Asian tourists anymore. And, without any insults – many of them did not look like regular luxury brand shoppers.

A friend of mine who owned a fashion boutique explained it to me: “When the girls go to clubs, they wear a cheap dress which they only wear once. It is dark, so you cannot really tell the quality of the dress. The logo of these bags, you can still see in a club, so they save their money and buy one of these bags.” From a business perspective, it probably makes sense for Louis Vuitton and the likes: If they can sell one of their lower segment bags once to more women, they probably make more money with less effort than investing in the fewer returning customers who may spend more but are also more difficult to please. Demna Gvasalia, the creative director of Balenciaga, explained in a recent podcast with The Business of Fashion that the company needs to sell branded sneakers and T-shirts as a “lower end category” to be able to finance their haute couture. Obviously, there is a sales and business strategy behind all of this.

But is this really good for their branding? I think the risk is that in the long-run, the market will get saturated, because shoppers will get tired of the brand for a simple reason: because everyone has a piece and they will start looking for something new and different. Furthermore, those who really loved the brands for their designs may be put off because they aspire a more unique and sophisticated look which makes them stand out from the crowd. A designer bag which has become a mass product – even though a very expensive one – is nothing unique anymore.

Furthermore, there are more serious implications if you are willing to look behind the curtain of brand storylines: Louis Vuitton manufactures all the goods for the American market in three factories in California and Texas – where did the “Made in France” go? Furthermore, soon after the Texas location was opened in 2019, complaints by workers were quoted in the media: Amongst others, the workers reported they “worked through sweltering heat without air conditioning, surrounded by a chain-link fence.” Louis Vuitton is not an exception here. If you look at the Fashion Transparency Index by fashionrevolution.org, some of the most expensive brands in the world are also those with the worst result on the index.

So, let me ask: Why would a spend a ton of money on a bag which is a) not made where it claims to be made, b) not applying the craftsmanship it used to apply and c) not treating their workers well? If you want to add d) which is making you like every second woman on the street?

I find it a bit sad because I really love fashion. But I do not really see much of what I used to love about it anymore: beautiful designs, high quality materials (I could write another article about that topic actually), true craftsmanship and ethical supply chains and work conditions. What I do see is yet another “investment bag we cannot live without” and a fast fashion approach even in the luxury segment. It does not mean that I would never ever buy any of these brands anymore. Maybe I will change my mind about it, when they can convince me with a proven track record that “true craftsmanship” is more than just a branding tag line and that the product is truly unique. Until then, I will continue my hunt for something which is truly special and keeps its promises.

What do you think about the current state of designer brands? Do you buy from them?

If you want to read more about this topic, I have published an analysis about the real return-of-investment of designer bags where I discuss if there is really a thing like an “investment bag”.

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