Are Luxury Brands In Trouble? What The Downturn Could Mean For Black Consumers

I love a designer bag just as much as the next girl, but in this economy? Yesterday’s price is definitely not today’s price. In fact, yesterday’s price has nearly doubled with a Chanel classic flap costing around $6K just five years ago, and now they’re well over $10K.

Turns out, I’m not the only one feeling this way about luxury shopping right now.

French luxury giant Kering released their financials for the first half of this year, and they were hit with a 16 percent revenue drop across the board, with Gucci taking the biggest L at a devastating 26 percent decline. Even Yves Saint Laurent couldn’t escape the downturn, falling 11 percent while other brands in their portfolio dropped 15 percent.

And this isn’t just Kering problem. It’s spreading across the entire industry. Bernard Arnault, the billionaire who owns Louis Vuitton and about 70 other luxury brands, insists this whole thing will blow over soon, but will it? I’m not so sure. With mass layoffs shaking up thejob  market (specifically with the increase of Black women who are unemployed), coupled with rising prices, and a President who is signing executive orders by the day, which could shake our entire worlds upside down, the last thing on people’s minds is there next designer purchase. Instead, it’s to save as much money as possible for a rainy day emergency (ironically, it literally seems to rain every day).

And investors, seem to agree with me because they’re also not convinced. LVMH shares are down 20 percent this year, and analysts at UBS are questioning whether luxury has lost its long-term appeal.

The reality of the matter is that luxury brands got greedy with their pricing, and now they’re facing the fallout. In a McKinsey report earlier this year, they showed that for the first time since 2016, the luxury industry is actually going to create less value than it did the previous year. After five years of unchecked price hikes and record profits, the luxury high is officially wearing off.

For Black consumers, whose relationship with luxury has always been complicated, this moment feels less like a shock and more like a reckoning. Remember when Celie in the The Color Purple said, “Until you do right by me, everything you think about is gonna crumble.” Well…. This may be our “I told you so” moment. They historically didn’t want us in their stores or campaigns, but our spending power became too big to ignore. Black consumers consistently punch above our weight class when it comes to luxury purchases, often seeing these pieces as investments and statements of success.

McKinsey’s so-called ‘aspirational luxury consumers’ are feeling the pinch most of all. When you’re stretching your budget to afford a Gucci bag that now costs more than some people’s rent, you start asking yourself if it’s really worth it? Price increases have hit their ceiling, and many of us are feeling the squeeze.

The slowdown in China also shifts the landscape in meaningful ways. That market was driving over 18 percent growth annually from 2019 to 2023, so with Chinese consumers pulling back, luxury brands are being forced to refocus their attention on domestic markets, including Black consumers who have proven their spending power.

There are still some bright spots though. Hermès is still riding high with 9 percent growth this quarter. The Birkin and Kelly remain untouchable—not just because of hype, but because their craftsmanship and scarcity keep demand sky-high. Bottega Veneta managed to squeak out a 1 percent increase too, which in this market feels like a major win.

But even these success stories can’t escape the broader industry challenges. The decline in international tourism is hitting luxury sales hard, with Kering noting that Western Europe and Japan are particularly struggling due to fewer visitors. For those of us who love to shop duty-free during international trips, this means fewer opportunities to snag that dream bag at a better price.

The real test will be how these brands respond to the crisis. When budgets get tight, will they stick with their diversity and inclusion promises? Or are they going to retreat back to their old ways and forget about the customers who helped drive their recent success?

This downturn could work in our favor, though. When money gets tight, only the brands that truly value us will last. The rest will learn quickly what happens when Black consumers decide to take our spending power somewhere else.

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