Why Luxury Brands Are Struggling In 2024

Using Social Listening To Understand The Context Behind The Weakness In Luxury Goods

Check out the dashboard we used to analyze this insight in Infegy Starscape. Dashboard available here!

High visibility is a huge part of buying and owning luxury goods. People want to be seen wearing or displaying them. However, as reported by the Wall Street Journal, the Business of Fashion, and Bloomberg report, the world’s luxury brands have suffered from notable vulnerabilities. We decided to explore these vulnerabilities with our social listening tool, Infegy Starscape, to see whether we could corroborate this industry-wide weakness reported by these publications. Broad-based social listening tools are perfect for understanding entire industries, as they capture disparate conversations across millions of voices and consumers. Let’s look into social listening’s explanations for why the world’s greatest luxury brands, like Gucci, Balenciaga, Burberry, and LVMH’s underlying brands, are in decline and look at whether we can find any encouraging signs suggesting an industry-wide reversal.

Declining Industry-Wide Post Volume

If you've been reading our insight briefs for a while, you'll note that any time we carry out an analysis, we usually start with post volume before we go deeper into any of our other social media indicators. Post volume, specifically how it changes over time, is a key indicator of whether millions of posts contain a potentially exciting data story or insight.

We've written extensively about trend analysis in the last few weeks. If you're interested in trend analysis, check out our trend analysis blog, located here.

To look into luxury goods post volume, we identified many of the largest luxury brands in the world, starting with Gucci, Balenciaga, and Burberry, as well as the dozens of brands that make up the mega-luxury conglomerate LVMH (Dior, Tiffany & Co., Louis Vuitton to name a few). Figure 1 shows three years' worth of post-volume data showing either flat growth (LVMH or Burberry) or downright concerning negative growth for Gucci and Balenciaga. For many of these brands, especially Gucci and Balenciaga, the COVID-19 pandemic made consumers flush with cash and a limited ability to spend on experiences, meaning they could spend more on luxury goods. These post volume declines show this era is over as consumers tighten their belts.

Figure 1: Three years of declining post volume for the world’s largest luxury brands (August 2021 through August 2024); Infegy Social Dataset.

Declining Industry-Wide Engagement

Now that we've looked at declining post volume, let's jump into even more impactful indicators suggesting major vulnerabilities across each of these luxury brands. Let's look at engagements and influence. At Infegy, engagements are the sum of likes, comments, and shares for a post. While volume is an important metric to watch to gauge how far a post has traveled across social media, Engagements reflect how excited or enamored your particular audience is. Having an engaged audience means higher conversions and a more exciting brand image. On the other hand, influence refers to the average reach of the account sharing that particular branded content. Lower influence scores mean that less influential accounts are sharing your branded content.

Across the luxury industry, we found dramatic declines in engagements and influence over the last three years. Balenciaga had the worst decline, with 94.7% fewer average engagements, a shocking decline that should cause massive concern at the fashion house. In addition to the decrease in engagement, influence declined for each of our companies. This suggests that their branded content is less relevant with high-visibility accounts, a factor that could be contributing to their declining post volume and engagements.

Figure 2: Three years of rapidly declining engagements and influence for the world’s largest luxury brands (August 2021 through August 2024); Infegy Social Dataset.

Infegy’s AI Explains Reasons for the Sector’s Weakness

We’ve uncovered alarming, industry-wide trends across the luxury goods industry while looking at the most prominent players. Knowing that a trend exists can be helpful, but understanding why it exists is even more helpful for businesses that are trying to guide themselves through an uncertain world. Infegy uses generative AI to help our clients immediately understand the causes that are driving the trends so they can better react to them. To be more specific, our GenAI tools summarize our analytical outputs into a human-digestible format, so you don’t have to be a data scientist to interpret what it means.

Figure 3 shows the reasons why this weakness is occurring. We highlight economic indicators, specifically in Asia, around China, Japan, and Korea. While we write predominantly for a US-based audience, it’s important to note that luxury brands over the last few years have seen much of their growth in international economies, specifically in Asia. The Chinese, Japanese, and Korean economies have all felt strong post-COVID shocks, and consumer conversations, specifically around luxury brands, reflect that weakness.

Figure 3: Infegy’s new AI Summary Widget explaining much of the weakness originates from Chinese, Korean, and Asian consumers (August 2021 through August 2024); Infegy Social Dataset.

International Post Distribution Suggests the Importance of Asia

While generative AI summaries are beneficial for gaining a broader understanding of our underlying dataset, validating what they say is always essential before relying on their findings wholesale. We decided to look at countrywide data for each brand to validate the Asia-centric analytical focus. We found a distinct concentration in Asia for the post volume of these brands over the last three years. Each of the countries mentioned, like China and Korea, appear prominently, with other Asian countries rounding out the top ten. This Asian prominence highlights just how important the region is to these brands that are often depicted as Western brands.

Figure 4: Three years of geographic data suggests the huge importance of Asia for luxury brand growth (August 2021 through August 2024); Infegy Social Dataset.

Positive Co-Branded Sentiment: A Positive Sign

While much of this brief has been negative up until now, it’s essential not to ignore the positive indicators that could suggest lanes for brand recovery and future growth. During our research, we examined each of these brands’ hashtags. We found overwhelmingly positive mentions of Asian-based collaborations (#JIMINxDIOR, #JISOOxDiorAW23, or #LadyJisooxDiorCoutureSS23). Each of these also had a significant post volume behind that positive sentiment. For each of these brands to recover on social media, we recommend that these brands continue to lean into these types of collaborations to foster cross-platform brand growth.

Figure 5: Branded hashtags our four luxury brands (August 2021 through August 2024); Infegy Social Dataset.

Takeaways for Your Brand

To navigate the ever-shifting landscape of consumer behavior, a social listening tool like Infegy Starscape is essential for your brand or agency. It helps uncover the underlying reasons behind industry trends, as seen in the decline of luxury goods. By leveraging real-time, AI-driven insights, you can identify emerging opportunities, such as positive collaborations, and adapt your strategy accordingly. Infegy Starscape not only highlights the "what" but also the "why," allowing you to stay agile and ahead of market changes.