Luxury brands have witnessed three decades of unprecedented growth. In April 2023, LVMH, home to the likes of Givenchy and Guerlain, even briefly became Europe’s most valuable company.

Since then, most luxury giants have lost momentum. Estée Lauder’s stock price has shed 35% since the start of 2024 . Hermès has lost 34% so far this year, and shares in Richemont, owner of Cartier and Chloé, have yo-yoed and are now down 15%.

Luxury’s troubles are not cyclical; they are structural. The hard truth is this: The playbook that made luxury successful is becoming its handicap.

Why?

The contemporary luxury model has run out of road

First, luxury is suffering from an innovation recession. Brands increasingly rely on heritage and iconic products rather than creating the next generation of desirable goods. The Hermès Birkin bag, for example, was created in 1984.…