What’s behind the luxury fashion slowdown? Canadian fashion insiders weigh in

The biggest news in the fashion world recently was not a viral runway moment or what Taylor Swift wore to dinner with Travis Kelce. It was that luxury market leader LVMH, which owns some of world’s hottest labels including Louis Vuitton, Dior and Loewe, reported third-quarter sales in its fashion and leather goods division were down 5 per cent from the previous quarter. A week later, French luxury group Kering, which owns Gucci, Saint Laurent, Balenciaga and Alexander McQueen, announced a 16-per-cent decline in the same period. Hardest hit was Gucci, where year-over-year sales fell 25 per cent.

A 5-per-cent drop for LVMH may not sound like much, but the abrupt decrease comes after years of momentum in a division that accounts for half the group’s revenue. And the drop hit at the exact same time LVMH was heavily marketing its brands through a €150-million ($224.7-million) Olympic sponsorship. Given that LVMH typically outperforms its competitors, luxury fashion executives everywhere are worried that a recession-caliber downturn is already in the works.

There are a number of reasons for the slump, including consumers who have tighter budgets owing to inflation or who are shifting their post-pandemic spending to wellness and travel. China, where splurging for European designer labels has softened along with the economy, has also had an impact.

Stimulating desire with exciting design innovations could be one way to help counter the global slowdown in luxury spending. But geographical differences might be making the situation too complex for a simple solution.

The uncertainty has also resulted in a musical chairs-like game of creative directors exiting and/or relocating to other designer brands. Hedi Slimane, formerly of Dior Homme and Saint Laurent, has departed Celine and Michael Rider, who left Ralph Lauren in May, has stepped into his shoes. Sarah Burton, who crafted Kate Middleton’s wedding dress while at Alexander McQueen, has been freshly installed at Givenchy. Kim Jones has left Fendi, where he was artistic director, to fully concentrate on his other gig, artistic director of Dior menswear. If the industry and fan chatter are correct, Jonathan Anderson might jump from Loewe to Dior women’s wear and John Galliano may move from Maison Margiela back to his namesake brand, owned by LVMH.

Working under these creative directors are robust design teams, the prime evidence being the strong collections the Chanel atelier has produced since Karl Lagerfeld’s successor Virginie Viard left in May. But even the most coveted designer label needs a leader who can deliver creativity, buzz and ultimately profits, which explains why executives hope a change at the top will reverse declining sales.

“Shareholders are not happy and there’s this panic mode,” observes Todd Lynn, a designer from Smiths Falls, Ont., who studied at the lauded Central Saint Martins in London before launching his own label in 2006. Lynn’s rock and roll vibe appeals to the likes of Bono, Mick Jagger and Marilyn Manson and he created all the costumes for PJ Harvey’s recent North American tour. He is also an associate professor of fashion design and communications at Kingston University London, where he counsels young talents to consider staying independent and offering great design at a somewhat affordable price point.

With a spending slowdown comes excess inventory, and the cost of warehousing unsold products also gets factored into the bottom line, which could be contributing to the upward pressure on prices. “That means that you’re not just paying for the product you’re buying,” Lynn believes. “You’re also paying for the product that you’re not buying.”

“They’re not thinking long term. They’re thinking next quarter, next quarter, next quarter” says designer Patrick Cox, who was born in Edmonton, and also studied in London, specializing in footwear. At his peak in the 1990s, his iconic Wannabe loafer sold a million pairs a year. He feels the current designer turnover, “is just switching racehorses. But it’s like a relay race – switch, switch, switch.”

The problem, he feels, is that fashion has been taken over by accountants. “Before that it was the designer’s boyfriend or sister or brother that was the CEO,” he explains citing Yves Saint Laurent and Pierre Bergé, Marc Jacobs and Robert Duffy, Valentino and Giancarlo Giammetti as examples. “They had a vision and took the business as far as they could with licensing. Then the super groups – Prada Group, LVMH and Gucci Group (now Kering), arrived in the 1990s and changed everything. It was all about debt and leveraging, and I was very innocently part of that generation.”

Cox was rocking back then with around 100 million British pounds in sales, stores in New York, London and Paris and zero investment. The temptation to grow was hard to resist. His first group of investors didn’t work out. “But they had me spending on a level that I never would have agreed to with my own funds. All of a sudden, we needed an investor.” A subsequent partner turned hostile and stopped paying factories, staff and magazines where Cox was advertising. “It just got worse and worse and then I was hit by a car in London, on Feb. 2, 2007. I spent several months in hospital and when I got back to work, my desk was a foot deep of bad news.”

Cox walked away and within months the company fell apart. He tried to rebuild under a new label but couldn’t make a go of it. “I was suicidal because I justified my existence by my turnover,” he says.

Cautionary tales of burnout are not lost on the younger generation of talent. “I’ve been talking to fashion students in Berlin, London and Paris, and it’s such a capitalist machine they are asking, ‘do I even want to be part of this?’ ” says Nan Devitt Tremblay, who has been screening her documentary, Carton d’Invitation in Toronto, Montreal and Europe.

The film contrasts Devitt Tremblay’s home and work life during her years as FashionTelevision’s go-to Paris reporter when host Jeanne Beker wasn’t on the scene. In pulling together the film, she reconnected with behind-the-scenes talents such as Frederic Tremblay, a Quebec native who spent a decade as senior design director at Marc Jacobs and Sophie Theallet, who is now living in Montreal and was Azzedine Alaïa’s right hand for 10 years. Their stories were so compelling, Devitt Tremblay now shares them in a podcast series, also called Carton d’Invitation.

“It takes a village to put on a show,” Devitt Tremblay declares in one podcast episode. “Every season, you source fabric, you work on prints and silhouette, you buy vintage, you find images that you get inspired by. It’s a very, very laborious process.”

Devitt Tremblay, who was a CBC reporter in Toronto before moving to Paris in 1986, also provides an intriguing picture of how things used to be, before public companies such as LVMH and Kering started snapping up designer labels and putting pressure on designers to produce more collections, and revenue.

“I talked to Peter O’Brien, who was at Rochas for 10 years, and he laughs about how the clothes weren’t selling but nobody cared that much because the fragrance was, and the owners were fine with the status quo,” Devitt Tremblay says. “Can you imagine how long somebody whose clothes weren’t selling would last today?”

Devitt Tremblay dates the designer turnover trend to the mid-1990s when Hubert de Givenchy retired – death or retirement being the only way a designer left their house back then. John Galliano took over for four collections, then was moved to Dior and replaced by Alexander McQueen. “From what I heard, poor old M. de Givenchy wasn’t happy with either of those choices,” Devitt Tremblay recalls. “But it was also an infusion of life. So maybe that’s what people are searching for now too.”

Newness is, of course, what drives the fashion business. And so fashion enthusiasts are waiting to see what magic the current creative director chess moves produce. But even if they bring the sizzle needed to entice people to spend, will that be enough to satisfy stockholders?

“Exponential growth is impossible,” Lynn says. “These big luxury brands can’t grow forever. Not unless they start selling to another planet.”