HOPE COUTURE

LOUIS VUITTON HopeCOUTURE serve looks givenchy GUCCI FENDI HERMES PRADA ALEXANDER MCQUEEN The luxury market predicts a bright future for nimble brands. By Meredith Welborn Illustration by Sarah Scambray Dior

As stores in Dallas began to reopen this fall, Dareth Douglass found herself face-to-face with the bag of her dreams in the newly renovated Chanel boutique. Douglass, a senior at Southern Methodist University, returned to the store a week later and left with a Chanel shopping bag in hand.

“Clothes, bags, accessories— all can have such an impact on your mood and experience,” she said. “It makes us all unique. How we decide to dress is a decision we make every single day.” And for Douglass, her mood that day clearly needed to be buoyed by a new luxury handbag. Like most industries, luxury fashion has taken a hit from the COVID-19 pandemic. In March of 2020, Boston Consulting Group projected that the luxury sector would be down between $450 billion to $600 billion worldwide from 2019. But there is hope for the future of luxury. In a survey of more than 100 SMU students, 75% said their desire for luxury goods has either stayed the same or increased since the pandemic began. History supports this return to shopping. In a study conducted by J.P. Morgan following the 2008 recession, the highend retail sector was completely recovered by the middle of 2011, more than two times quicker than low-end retail. While the pandemic may not change the ultimate trajectory of luxury fashion companies, the brands that will thrive post-pandemic are those adapting to the rapidly changing fashion landscape, experts say. What matters in the end is the ability of a luxury fashion brand to appeal to the new generation of shoppers and to integrate a strong digital presence with traditional brick-and-mortar retail while continuing to inspire consumers. “What COVID has done is it’s accelerated the things that were already there,” says Jeffrey Carr, professor and director of New York University Leonard N. Stern School of Business Fashion and Luxury Lab. Take Neiman Marcus, for example: Talk of bankruptcy long preceded March 2020, when the pandemic abruptly shut down swaths of the U.S. and global economies. At the same time, the price for a single share of luxury brand conglomerate LVMH was at $97.18 in January, dropped to $62.51 in March and was back up to $100.38 by mid-September, Carr says. Each generation tends to look to the next generation for what’s trending in fashion, and now Generation Z is beginning to participate in the luxury market, said Thomaï Serdari, Founder of luxury brand strategy firm BRAND(x)LUX and director of NYU’s Fashion and Luxury MBA program.

“There are many more younger consumers who can actually reach this type of aspirational luxury,” she said. “These consumers have a little bit more forward-looking taste than people who are 10 or 15 years older.” While Gen Z only represented about 4% of the luxury market in 2019, according to Boston Consulting Group, companies need to keep an eye on their behaviors, as they heavily influence the Millennials who make up between 32% and 50% of this market. “This younger generation is the most influential generation on Earth right now,” said Daniel Langer, CEO of luxury management firm Équité and Pepperdine University professor of luxury strategy. And Gen Z isn’t letting the pandemic get in between them and the latest fashion trends. While some Gen Zs are opting to shop online these days, some are choosing to take advantage of the semi-exclusive nature of retailers who are open either by appointment only or at a limited capacity, including SMU junior Regan Tyrell. “Neiman’s was doing appointment-only, and you had one of the stylists walk around with you. I had almost the whole store to myself,” she said. “It was so fun.” However, some luxury brands have failed to meet the luxury fashion market where it is today. Often, these brands will say that they have an older target market, and there is no need to target Gen Z. In most cases, they will put their clothes on younger models and expect young people to buy their clothes, but this doesn’t work, Langer said. “These companies often have zero ability to connect with this younger generation,” he said. While this generation may not physically contribute much to the luxury sector now, it is already clear that Gen Z is drawn to aspirational brands. “I regularly will ask my students if they’ve ever bought anything they couldn’t afford,” said Carr. “Pretty much every single hand will go up.” With the success of companies like Amazon, many consumers have a skewed idea of fashion’s online presence. Consumers “think all retail went online before the pandemic. And that’s just not true. It was growing to billions of dollars, but as a percentage, it was less than 10% still,” said Charles Besio, Southern Methodist University Cox School of Business marketing professor. Now, about 30% of sales happen online. While researchers projected this shift into a more digital-centric shopping experience, it happened six or seven years too early, Langer said. While a quality online shopping experience is becoming vital, what’s more important to Gen Z is a brand’s social media presence. What better way to target this generation than becoming a source of its entertainment? 85% of Gen Zs say they find new brands through social media, according to marketingcharts.com. “I have been shopping online more,” wrote an SMU student in the survey “I have found new websites through doing so.” Luxury brands have lagged behind in terms of digital advancements — many believing that selling their products online cheapens their brand. Or, they believe that a social media presence is not required because the brand name is so strong. But brands are losing competitiveness because they have bad digital presences, Langer said. For a lot of fashion lovers, shopping is not considered a means to an end — it’s an experience. Now more than ever, buying a new pair of shoes or a new bag has kept consumers cheerful through the pandemic. “Online shopping was something I really enjoyed during the pandemic,” SMU sophomore Morgan Gruwell wrote in the survey, “giving me something to look forward to when buying a new item.” Today, the true test of a brand’s strength is its ability to pique curiosity and spark creativity among consumers. Those that can’t, may find themselves in trouble as the pandemic continues.

“The brands that aren’t inspiring customers,” Langer concludes, “will not make it.”