Luxury has always been a business of perception as much as production. For more than 250 years, the industry’s most successful brands have commanded extraordinary prices by shaping the stories consumers believed about craftsmanship, heritage and exclusivity. But in an age of radical transparency, rising prices and digital scrutiny, that model is being rewritten, making reputation one of luxury’s most valuable and vulnerable assets.
In the winter of 1765, a messenger arrived at a modest pottery works in Burslem, Staffordshire carrying a royal request. Queen Charlotte, consort to King George III, had heard of a remarkable cream-coloured ware and wished for a complete tea service made from it. The potter, Josiah Wedgwood, delivered it personally, then made a decision that would shape the next 260 years of luxury commerce: he asked permission to rename his creamware “Queen’s Ware” and to style himself “Potter to Her Majesty.”
Within weeks, aristocrats who had never given pottery a second thought were besieging his London showroom. Wedgwood, who had no formal education beyond the age of nine, had discovered something that still underpins luxury today: products become luxurious not because of what they are made from, but because of the reputation that surrounds them.
Others perfected the formula. In the mid-19th century, Charles Frederick Worth transformed dressmaking into haute couture by becoming the first designer clients sought out by name rather than by garment, turning the creator into the brand. A few decades later, Louis Vuitton built his reputation not simply on travel trunks, but on making them the preferred luggage of Europe’s aristocracy and imperial courts, proving that who carried a product mattered as much as the craftsmanship behind it. By the 20th century, De Beers had convinced a generation that a diamond was the only acceptable symbol of love, Ferrari had made scarcity itself part of the ownership experience, Hermès had turned waiting lists into status symbols, and Swiss watchmakers had survived the quartz crisis by selling heritage instead of precision.
Whether carved from marble, shaped from clay or stitched from leather, craftsmanship alone rarely guarantees longevity. Michelangelo’s David—the inspiration for our cover—is perhaps the ultimate example. More than five centuries after it emerged from a single block of Carrara marble, its significance extends far beyond the object itself. It carries a story, a cultural meaning and a reputation that have compounded over time. Luxury built an industry on much the same principle.
Today, that principle is being tested.
“Luxury did not lose its mystique,” says Matthias Weiskopf, Founder of the Singapore-based consultancy LUXE/LINK, who has spent 25 years selling the likes of Ferraris, Porsches and McLarens. “It lost the information asymmetry that used to do the work for it. For decades, the client knew what the brand chose to tell them, and distance was mistaken for depth.” What remains, he argues, is a harder test: “Brands whose mystique rested on opacity are now visibly hollow, while brands with something real underneath have lost nothing whatsoever.” The conversation has become democratic. Authority, in his reading, has not; it’s simply stopped being assumed and started having to be earned.
The scale of that reckoning shows up in the numbers. According to Bain & Company’s Luxury Goods Worldwide Market Study, the personal luxury goods market lost roughly 50 million consumers between 2022 and 2024, as years of repeated price increases collided with a public newly equipped to compare, question and walk away. A follow-up update found the market shed a further 20 million active buyers in 2025 alone, leaving the global client base at around 330 million, down 15% from 400 million in 2022 and back to where it stood in 2013. Bain’s own researchers have been unambiguous about the cause. Patterns pointing to repeated price rises since 2019 have eroded perceived value, hitting aspirational shoppers, the demographic that filled the middle of the pyramid, hardest.
The Price is Not Right
Pricing is the easiest of these forces to quantify because it appears in the numbers long before it appears in opinion. Luxury groups spent the post-pandemic boom pushing through successive price increases, leaving many products priced between 1.5 and 1.7 times higher than they were in 2019. Consumers initially absorbed those increases, but the market is now showing clear signs of resistance. According to reporting by CNA Luxury, between 35% and 40% of luxury goods were sold at a discount in 2025, at least five percentage points higher than a decade ago, contributing to average operating margins falling to around 15–16%, down from a peak of 23% in 2012 and their lowest level since 2009. The issue is no longer simply that luxury has become more expensive. Prices have risen faster than many consumers believe the experience, craftsmanship and service now justify.
Bashar Wali, Founder and Chief Executive of Practice Hospitality, who has spent more than three decades running independent luxury and lifestyle hotels, sees the imbalance from inside a hotel rather than a spreadsheet and locates the fault somewhere slightly different: not the price rising, but the experience behind it failing to rise with it. “A guest feels it when they pay a $900 rate and get a $300 experience before the elevator reaches the fourth floor,” Wali says. “And with social media, 40,000 people hear about it before they check out.”
His diagnosis of the industry’s greatest threat is neither pricing nor transparency in isolation. “None of the above,” he explains. “The greatest threat to luxury is sameness. Walk into 30 ‘luxury’ hotels this year and you’ll find the same terrazzo lobby, the same Edison bulbs, and a $26 avocado toast.” Owners, he argues, study the comp set instead of the guest, producing what he calls the “Muddy Middle”: full-service four-star hotels priced like luxury but delivering “cookie-cutter, select-service experiences.”
His solution is unglamorous and operational rather than creative. “Justification of rate stops is an operating imperative. Staff the property properly, fund investments in infrastructure instead of deferring it another year, train your team for emotional intelligence.” As he puts it: “Price is a promise. You deliver on it or you pay for it in reputation, with interest.”
If price is a promise, scarcity has historically been the justification. Luxury has never sold raw materials alone; it has sold rarity, craftsmanship and the feeling that what sits behind the premium is genuinely exceptional. But scarcity only works if consumers continue to believe it. As Wali’s argument suggests, when everything begins to look and feel the same, from hotel lobbies to customer experiences, exclusivity becomes much harder to defend. If every luxury experience is interchangeable, what exactly is scarce? And if scarcity no longer feels credible, what justifies the price?
Once-rare objects now appear endlessly in feeds: rows of Birkins, collections of Patek Philippes and limited editions displayed as everyday possessions rather than distant aspirations. At the same time, consumers have unprecedented visibility into how luxury products are made. In 2024, Milan prosecutors placed units of Dior and Giorgio Armani under judicial administration after uncovering subcontractors that exploited undocumented workers to produce leather goods. The investigation’s most-cited detail required little explanation: a Dior handbag manufactured for about $57 (€53) was sold for roughly $2,800 (€2,700). No one expects luxury to be priced at cost, but the figure challenged the narrative that had long justified the premium. For perhaps the first time, consumers were not simply questioning what luxury cost. They were questioning what exactly they were paying for.
Still, as tempting as it is to only blame TikTok, AI-generated content or influencer culture for puncturing luxury’s mystique, Weiskopf argues they merely exposed a problem that already existed. “Transparency, social media and influencer culture are amplifiers; pricing is the trigger,” he says. “When price rises faster than the client’s felt experience of craft, service and treatment, the gap becomes the story, and every other force carries it further and faster.”
Legacy is No Longer a Strategy
If pricing exposed luxury’s reputation problem, Daniel Langer, Executive Professor of Luxury Strategy at Pepperdine Graziadio Business School, believes storytelling explains why some brands are weathering it better than others. He draws a sharp distinction between the small minority, “1 to 5%” in his estimate, that genuinely deserve the luxury label, and the “95 to 99%” that are “luxury in ambition only,” brands that “swim in the sea of sameness, do more or less what their competitors do, package it well, and put a high price point on it.” For the handful doing it properly, he argues, mystique has never been the problem. “They provide awe-inspiring quality and experiences every single day. They have mystique. They always will.”
Drawing on decades of research and advisory work with luxury brands, Langer argues that high and ultra-high-net-worth clients are rarely paying for the product alone. “The product is the vehicle. The story carries the value.” His research suggests the real purchase is an anticipated shift in identity and perception, the feeling of becoming more attractive, influential or accomplished through ownership.
That imbalance matters because today’s consumers can verify almost every claim a brand makes. “They all say the same thing: we create the best, we use the finest materials, we have the greatest heritage. If everyone says it, no one says it.” Product excellence, Langer asserts, has become “table stakes”—a condition of entry rather than a source of distinction. The premium now rests on whether a brand can tell a story that no competitor can credibly imitate.
Jekaterina Rindt, a lecturer in luxury marketing management at Lancaster University Management School, pushes back on the storytelling-budget diagnosis. “Luxury has not lost its mystique because of social media,” she says. “It’s lost it because many luxury brands have increasingly adopted commercial consumer marketing strategies.” Her prescription is what she calls “artification”: positioning products less as consumer goods and more as cultural creations, in the way “consumers rarely ask whether a Van Gogh is worth the price.” She points to Loewe under Jonathan Anderson as a working example, a house repositioning itself “less as a fashion retailer, and more as a curator of contemporary craft and culture,” anchored by initiatives like the Loewe Foundation Craft Prize.
The velvet rope was a nightclub strategy from 1998. By the time we get to 2031, the respected brands will be the ones who focus on belonging. Experience is the one thing nobody can copy, because it lives in people not product. – Bashar Wali
Virender Rawat, Founder and Creative Director of the emerging Indian fashion house Maison D’vine, sees the same shift through a different lens. “Luxury has not become less desirable; it has become more transparent,” he says. “The mystery has shifted from ‘Who can buy this?’ to ‘Why does this deserve to exist?'” Heritage answered the first question for decades. Increasingly, it says very little about the second.
The industry’s response itself suggests heritage is no longer enough. Across the past decade, luxury houses from Burberry to Gucci to Balenciaga and more, have refreshed creative leadership, repositioned their brands and searched for new cultural relevance, recognising that legacy alone no longer guarantees desire. EY’s 2026 Luxury Client Index reinforces that shift: while heritage remains an important purchase driver, its influence declines sharply among younger consumers, with just 46% of Gen Z citing heritage and legacy as a reason for favouring established brands, compared with 67% of baby boomers. History may establish credibility. Increasingly, it is contemporary relevance that sustains it. Similarly, Edelman’s 2025 Brand Trust Special Report found that 73% of people say their trust in a brand would increase if it authentically reflected today’s culture.
Who Owns Luxury’s Reputation Now?
The final shift is the hardest for any brand to control because it happens almost entirely outside its own channels. Edelman’s research also finds that customers, reviewers, independent experts and peers now play a greater role in building trust than anything a brand says about itself. Every editorial review, unboxing video, resale forum, creator opinion and customer experience contributes to a brand’s standing, whether or not the brand had any say in the matter. Luxury has moved from declared prestige to earned credibility.
That changes where trust is built. “Cost-based justification is an argument you lose the moment the number is known,” says Weiskopf. Instead he argues that lasting value comes from decisions consumers cannot easily quantify: the choices a brand makes that “no rational spreadsheet would approve”, the time it refuses to compress and the quality of the relationship surrounding ownership. “A margin can be calculated. A choice cannot.” Increasingly, he believes, reputation is created less at the point of manufacture than at the point of relationship.
The other experts arrive at much the same conclusion from different directions. Langer believes the brands that succeed will think less like manufacturers and more like cultural protagonists. Wali argues the future lies not in exclusion but in belonging. “Exclusivity is a function of who you keep out. Belonging is a measure of who feels seen once they’re in.” Rawat reaches the same idea through purpose. “When customers understand the purpose behind a product, price becomes part of a larger story rather than the entire conversation.”
Across every conversation, one idea keeps resurfacing: reputation is no longer something a luxury brand owns. It’s something it earns, day after day. Every product launch, customer interaction, editorial review, resale value, supply-chain revelation and social post either strengthens or weakens it. A stronger campaign may increase awareness, but it cannot repair an experience that fails to justify the promise. Luxury is not losing its relevance, but it may be losing the ability to rely on old assumptions. Heritage still matters. Craft still matters. Exclusivity still matters. But none of them can substitute for trust.
Josiah Wedgwood built an empire by persuading people to believe in the story surrounding his pottery. Two hundred and sixty years later, luxury still runs on stories. The difference is that brands are no longer the only ones writing them.