Luxury’s Lockdown: Legacy Brands Closing the Doors—Who’s Breaking In?

Chanel’s Classic Flap bag jumped 104% in five years. Hermès Birkins cost $1,500 to make—but sell for $13,000. Meanwhile, Polène offers Parisian luxury at 70% less. Is heritage still worth the price?

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The “Luxury” Lie: Why Customers Are Walking Away

For decades, the myth of luxury fashion has been sold, packaged, and protected by the very brands that profit from it. Hermès, Dior, and their counterparts have cultivated a narrative where sky-high prices signal superior craftsmanship, exclusive materials, and timeless desirability. But what if the reality is far less glamorous?

Luxury ≠ Quality: The Numbers Tell a Different Story

If luxury pricing were a measure of materials and craftsmanship, then a $10,000 Hermès Birkin should be 30 times better than a $350 Polène bag. But it isn’t.

A Hermès Birkin 30cm Togo leather bag costs an estimated $800–$1,500 to produce, yet retails for $13,300 and up. Some exotic-skin versions reach $150,000, even though production costs remain a fraction of that. 

Hermès' Birkin bag saw a 15% price increase since 2019—less extreme than Chanel, but still outpacing material cost inflation (Source: Purseblog)

Dior’s Lady Dior has increased over 50% in five years, climbing from $4,000 in 2019 to $6,100 in 2024—without any significant upgrades in materials or production techniques.

Since 2019, Chanel’s Classic Flap Bag price has skyrocketed by 104%—outpacing inflation and material costs. Yet, craftsmanship remains unchanged. (Source: Purseblog via amyodell.substack.com)

Polène bags, crafted in the same Ubrique workshops as Loewe, start at $350—yet offer comparable leather quality and hand-finishing to brands charging ten times as much.

So what are customers really paying for?

The 1,000% Markup: A Brand Name Over a Better Bag

The true value of legacy brands no longer comes from their materials or craftsmanship—it’s in their ability to make you believe they’re worth it. Luxury houses invest heavily in perception:

• Chanel, Dior, and Hermès allocate billions to celebrity endorsements, flagship stores, and PR campaigns—far more than on leather, hardware, or craftsmanship itself.

• Hermès create artificial demand by restricting access, convincing buyers that their bags aren’t just products, but investment pieces.

• Unlike Polène or Strathberry, which focus on product-first branding, heritage houses monetize status over substance—offering an “entry ticket” to high society.

Who Wins? Brands that master perception, not necessarily those with the best products. Who Loses? Consumers paying a 1,000% markup for what is often just a well-marketed product (Source: HSBC; BoF Analysis)

Consumers Are Fighting Back—And It’s Showing in Sales

Luxury brands are starting to feel the consequences of unrestrained price hikes and shifting consumer sentiment:

• The world’s top luxury brands have lost 50 million customers since 2022, driven by aggressive price inflation.

• Gen Z, the next powerhouse consumer demographic, values exclusivity differently—leaning towards indie luxury, sustainability, and digital-first brands like Polène and Telfar over legacy names. 

• With brands like Dior and Chanel increasing prices 2–3 times faster than inflation, many shoppers are turning to resale platforms like Vestiaire Collective and The RealReal—where Hermès bags still hold value, but mid-tier luxury loses its grip. 

How Newcomers Are Outsmarting Luxury Giants

For decades, luxury brands controlled desire through scarcity. If you wanted a Hermès Birkin, you played by their rules—building a relationship, spending thousands on other items, and waiting years for an invitation to buy. 

The new generation of luxury consumers isn’t waiting. They’re clicking.

Direct-To-Consumer (DTC): The Model That Luxury Overlooked

Legacy luxury brands built their success on a rigid supply chain: flagship stores, wholesale partnerships, and high-end department stores. This ensured control over distribution but also meant prices increased by up to 300% inflated by third-party markups.

Polène, Telfar, and Jacquemus don’t rely on middlemen. They don’t need a flagship store on the Champs-Élysées. Their “storefronts” exist on Instagram feeds and TikTok For You Pages. While Hermès makes consumers “build a profile” before they can even be considered for a Birkin, Polène offers one-click purchasing with global shipping—no artificial hurdles. Without relying on wholesale buyers or department stores, DTC brands control their inventory and production cycles, allowing them to adjust pricing and product offerings based on real-time data.

By 2025, DTC brands are expected to grow by more than $50 billion, outpacing traditional wholesale channels. Luxury brands that rely on wholesale partnerships are losing pricing power, as retailers implement their own discounts and promotions. Chanel, Hermès, and Louis Vuitton have aggressively raised prices to counteract declining margins—but at what cost?

Social Media: The New Luxury Storefront

If luxury’s power once came from exclusivity, social media is dismantling that advantage. A brand’s desirability is no longer dictated by its place in a department store or its exclusivity in high-end magazines. Instead, it’s driven by organic conversations, viral moments, and influencer validation.

• 74% luxury shoppers influenced by digital touchpoints such as Instagram and TikTok—not through print ads, fashion weeks, or flagship stores.

By 2025, nearly 20% of luxury sales are projected to take place online, marking a significant shift in consumer purchasing behavior. While offline sales remain dominant, the rise of digital luxury shopping underscores the growing influence of e-commerce in the high-end market. (Source: Euromonitor; Forrester)

• Jacquemus’ Instagram-first strategy helped grow its revenue to €280 million by 2023, with limited reliance on traditional retail distribution.

• Telfar’s direct-to-consumer drops consistently sell out in minutes, proving that brand hype can be sustained without brick-and-mortar locations.

Polène has strategically built its following without traditional advertising, relying instead on highly curated Instagram aesthetics and organic word-of-mouth marketing. Its success underscores a new luxury paradigm: brand prestige is no longer about scarcity—it’s about curation.

Hermès is Everywhere—And That’s a Problem

#HermesBirkin has millions of millions of views on TikTok. Every major influencer has one. Resellers are flipping Birkins more than Hermès itself can manufacture. Resale sites list more Birkins than Hermès boutiques even stock. A Birkin is now seen as a social currency on resale platforms rather than an aspirational purchase from the brand itself.

Luxury’s next powerhouses won’t be the brands that protect exclusivity. They’ll be the ones that redefine it.

Why Legacy Brands Still Dominate

Disruptors are shaking up the industry, but true luxury isn’t just about quality—it’s about status, control, and a retail experience that digital-first brands can’t replicate.

So, while emerging players might steal headlines, will they ever truly threaten the old guard?

The Cornerstones of Luxury

Leading luxury brands command significant portions of the global market, with Chanel holding a 6% share, Dior at 5%, and both Gucci and Louis Vuitton at 4% each. LVMH Moët Hennessy Louis Vuitton, the parent company of Louis Vuitton, reported revenues of €86.2 billion in 2023, reflecting its substantial influence in the luxury sector. The Hermès Birkin bag has demonstrated remarkable investment potential, with studies indicating an average annual return of 14.2% between 1984 and 2015, outperforming traditional investment avenues such as the S&P 500 and gold. 

While emerging brands like Polène and Telfar offer contemporary designs and accessible price points, they lack the historical gravitas that transforms products into status symbols. The enduring value and desirability of legacy brands are evidenced by their sustained market share and the appreciation of their products over time.

Luxury is Still a Physical World

Flagship stores aren’t just places to shop—they’re power statements, status symbols, and immersive brand worlds that no digital interface can replicate.

• 63% of regular luxury buyers prefer purchasing high-end items in-store, compared to 54% of occasional customers.

• Louis Vuitton’s flagship on Champs-Élysées alone acquired €770 million investment, reflecting the store's strategic value.

Despite the rise of e-commerce, offline retail continues to dominate the luxury market, with physical stores accounting for over 80% of global luxury goods sales. This data underscores the enduring importance of in-store experiences, personalized service, and brand-controlled environments in maintaining luxury’s exclusivity. (Source: Market.us News)

Polène may deliver to your doorstep, but no one hands you champagne when you open the box. The ultra-rich aren’t scrolling through Instagram for bags—they’re being escorted into private VIP salons. A luxury brand without a flagship is like a five-star hotel without a lobby—it exists, but does it feel the same?

Exclusivity is Not Dead—It’s More Powerful Than Ever

The industry’s biggest myth? That luxury is becoming more inclusive. In reality, true luxury is becoming even more restrictive. While digital disruptors fight for visibility, legacy brands are maintaining power by being selective—and it’s working.

• Hermès increased its prices by 5-10% in 2023—and still saw a 21% revenue jump.

• The high resale value of limited-edition luxury items, such as certain Hermès bags fetching over $200,000 at auctions, reflects the success of exclusivity in enhancing brand allure.

True luxury isn’t defined by how many people buy it—it’s defined by how many people can’t. While democratization of luxury through accessible products can broaden a brand's customer base, it may dilute the brand's exclusivity and perceived value. Legacy brands' deliberate limitation of product availability not only preserves their elite status but also fosters a sense of rarity that continues to captivate high-net-worth individuals

The Future of Luxury: Reinvention, Not Disruption

If newcomers like Polène, Telfar, and Jacquemus are challenging legacy brands, it’s not because they’ve replaced them—it’s because they’ve forced them to evolve.

• Luxury brands are anticipated to incorporate digital assets, such as NFTs and virtual collectibles, to offer exclusive digital experiences and products, thereby appealing to tech-savvy consumers while maintaining exclusivity.

• Advancements in data analytics will enable brands to curate hyper-personalized offerings, enhancing customer loyalty and reinforcing the bespoke nature of luxury.

• Environmental consciousness will lead brands to adopt sustainable practices, offering eco-luxury products that appeal to discerning consumers without compromising on exclusivity.

The enduring success of legacy luxury brands amidst the rise of digital newcomers can be attributed to their unwavering commitment to heritage, exclusivity, and exceptional in-store experiences. By continually adapting to contemporary trends while preserving their core values, these brands are poised to maintain their preeminent status in the luxury market well beyond 2030.