Cover Is the wave of layoffs sweeping through major brands the end of an era? (photo: pexels)
Is the wave of layoffs sweeping through major brands the end of an era? (photo: pexels)
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A wave of layoffs is sweeping through major brands, prompting the question: is this the end of an era, or simply a necessary “restructuring” to adapt to a changing landscape?
Recent figures in luxury goods offer a bleak outlook. British luxury icon Burberry revealed plans to cut 20 per cent of its global workforce, some 1,700 jobs, citing a sharp fall in sales across key markets like China and the US. Gucci’s parent company Kering also confirmed a 4 per cent reduction in staff by December 2024. At Gucci itself, numbers have dropped 22 per cent since its peak in 2022. Even Chanel is following suit, trimming 70 jobs in the US.
LVMH, the industry’s most powerful conglomerate, though tight-lipped on exact figures, has adopted a policy of “selective delayering”; a gentler way to describe layoffs. CEO Bernard Arnault has acknowledged the strain, with revenue in Asia (excluding Japan) down 14 per cent in Q2 2024. It is clear that the glamour and exclusivity of luxury fashion no longer provide immunity from global economic shifts.
The allure and exclusivity of high fashion, once considered untouchable, no longer shield the industry from market turbulence. So what has placed these “empires” in such a precarious position?
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Declining revenue and challenging technology play
The economic slowdown and persistent inflation certainly weigh heavily, yet they tell only part of the story. Consumers, especially the middle class and younger generations, are growing more cautious with their spending. They hesitate to splurge on non-essential luxuries. This trend is especially visible in China, where a drop in tourism and domestic spending has directly hit sales.
Above The economic slowdown and persistent inflation certainly weigh heavily, yet they tell only part of the story (photo: Unsplash)
The economic slowdown and persistent inflation certainly weigh heavily, yet they tell only part of the story (photo: Unsplash)
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Above Consumers, especially the middle class and younger generations, are growing more cautious with their spending (photo: Unsplash)
Above Rapid price hikes have left some customers feeling alienated (photo: Unsplash)
Consumers, especially the middle class and younger generations, are growing more cautious with their spending (photo: Unsplash)
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Another significant issue is pricing strategy. Rapid price hikes have left some customers feeling alienated. Take the Chanel 2.55 bag, for instance: its price rose from US$1,650 in 2008 to $10,200 in 2023, a jump many find excessive. By contrast, brands like Prada and Miu Miu, with steadier pricing, have enjoyed double-digit growth in Asia. This demonstrates that demand remains, but customers seek greater fairness and value.
More crucially, the luxury fashion world, famed for meticulous craftsmanship and master artisans, is now facing a technological revolution. Leading brands are investing heavily in artificial intelligence (AI) and automation to refine every stage, from creative design to the customer experience.
Read more: When AI becomes a “colleague”, how should entertainment industry personnel adapt in the digital age?
Above Leading brands are investing heavily in artificial intelligence (AI) and automation to refine every stage, from creative design to the customer experience (photo: Glance)
Leading brands are investing heavily in artificial intelligence (AI) and automation to refine every stage, from creative design to the customer experience (photo: Glance)
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In manufacturing and design, AI is becoming a powerful assistant, helping fashion houses analyse trends, predict market demand, and even sketch out future collections. Robots are gradually being introduced into repetitive production stages, allowing human labour to focus on tasks that require greater creativity and skill.
In supply chain management, Blockchain technology plays a vital role in creating transparency and trust. By tracking products from raw materials to consumers, Blockchain helps brands combat counterfeiting while reducing reliance on traditional management staff.
Above In supply chain management, Blockchain technology plays a vital role in creating transparency and trust (photo: Mirrar)
In supply chain management, Blockchain technology plays a vital role in creating transparency and trust (photo: Mirrar)
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Finally, in the realm of customer experience, augmented reality (AR) and AI virtual assistants have transformed the way we shop. Customers can now virtually try on clothes at home or receive advice around the clock from virtual assistants, enabling brands to streamline their in-store teams while enhancing convenience and personalisation for shoppers.
“Storm” or “new wind” to reorient in crisis
The wave of layoffs presents challenges for both businesses and employees. For luxury brands, reducing staff risks damaging an image founded on exclusivity and superior quality. Losing employees, particularly creative and technical experts, threatens the ability to innovate and stay competitive in a fast-evolving market. As LVMH CEO Bernard Arnault has observed, even when called “restructuring,” layoffs can harm employee morale and loyalty.
Above For luxury brands, reducing staff risks damaging an image founded on exclusivity and superior quality (photo: Pexels)
For luxury brands, reducing staff risks damaging an image founded on exclusivity and superior quality (photo: Pexels)
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For workers, losing jobs in luxury is a significant setback, given the high skill level involved and often long-term commitment to a brand. Those affected face financial uncertainty and pressure to secure new roles in an increasingly tough job market. Additionally, the shift towards sustainable and digital business models demands rapid skill upgrades—something not everyone can manage immediately.
Yet every challenge carries opportunity. This wave of layoffs could prompt luxury brands to reconsider their business strategies and future objectives. Companies such as Chanel and LVMH are investing heavily in technology like augmented reality and artificial intelligence to improve customer experience and streamline supply chains. This shift opens doors for individuals skilled in technology and data, fields that luxury has not traditionally prioritised.
Above For workers, losing jobs in luxury is a significant setback, given the high skill level involved and often long-term commitment to a brand (photo: Pexels)
For workers, losing jobs in luxury is a significant setback, given the high skill level involved and often long-term commitment to a brand (photo: Pexels)
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For employees, now is the moment to pivot their careers. The luxury fashion sector is expanding into new areas such as restaurants, hotels, and lower-priced products (under $500) aimed at younger customers. Those with creativity and adaptability may find opportunities in related fields like sustainable fashion, where brands including Prada and Miu Miu have found success with affordable pricing and appeal to Gen Z. Moreover, green consumerism and the circular economy are creating new roles in recycling and sustainable design.
