Luxury fashion has long been about desire – objects of near-mystical allure, shaped by craftsmanship and creative vision. Yet today, it is increasingly defined by quarterly earnings, price hikes, and relentless market expansion. This quiet but profound shift is now reaching a turning point, with two of the industry's biggest names – Gucci and Chanel – standing at a crossroads.

The recent struggles of Gucci and Chanel underscore not just a difficult economic environment but something deeper: a crisis of identity in an industry that has drifted far from its origins.

Few have studied this shift as closely as Pierre-Olivier Essig, Head of Research at AIR Capital, a London-based investment investment advisor specializing in European equities. His latest research dissects the transformation of high fashion from an art form into a business-first machine. «Luxury Fashion is becoming anecdotal inside the largest players’ business model, with creative designers not needed anymore,» Essig observes. «Design studios are replacing them with ease, avoiding the cult status and inherent burnouts of the star creators.»

Gucci: 16 Percent Down

Gucci, once the crown jewel of Kering, is reeling from a 25 percent drop in sales in the third quarter of 2024, dragging its parent company’s revenue down by 16 percent. The numbers alone are stark, but they tell only half the story. The real drama played out behind the scenes when Gucci abruptly parted ways with creative director Sabato De Sarno after barely two years in the role.

His departure, framed as a mutual decision, was in reality an admission of failure. De Sarno’s minimalist aesthetic—ushered in to erase the flamboyance of Alessandro Michele’s Gucci—failed to ignite excitement among consumers. His «Ancora» collection leaned heavily on oxblood red, but a color does not make a collection, let alone a vision.

Luxury Needs Mystery

Gucci’s troubles, however, go beyond a creative misfire. Its saturation across the market, with endless collaborations and logo-heavy drops, has exhausted its air of exclusivity. «Gucci was everywhere—too many collaborations, too many collections, too much branding. Luxury needs mystery, and Gucci lost that,» Essig notes. The upcoming Autumn/Winter 2025 collection will not bear the stamp of a singular creative force but rather that of the Gucci Design Studio. A shift in strategy? Or simply an admission that the old model no longer works?

Chanel’s crisis is less dramatic but equally revealing. The Maison, long a bastion of luxury’s traditional codes, has begun to stumble. Its operating profits sank by 34 percent. The culprit? A mix of factors: relentless price increases, changing consumer habits, and an underwhelming creative vision under former artistic director Virginie Viard.

Studios Instead of Stars

Her tenure, marked by safe, repetitive collections, ended quietly in 2023. But something has shifted since. «Last week, Chanel Design Studio’s Spring Summer 2025 Collection was light, colorful, far more exciting than Virginie Viard’s uninspiring collections when she headed Chanel fashion shows,» Essig points out. The message is clear: perhaps Chanel, like Gucci, is finding a new life without the burden of a star designer.

The decline of these giants reflects a larger reckoning for the industry. Luxury brands today exist in an era where Generation Z dictates market trends, yet this is an audience that does not behave like its predecessors. «Generation Z doesn’t watch ads. Being chronically online makes them very quickly bored. To make an impact, luxury brands need to raise the game, with content that’s original, exciting, and surprising, while fitting the brand’s value and story,» writes Essig.

Authenticity, Exclusivity, Experience

The old formulas of status-driven advertising and ostentatious logos are losing their grip. In their place, authenticity, exclusivity, and experience are taking center stage.

But there is a paradox. The very brands that once thrived on creative genius now seem intent on eliminating it. The age of the star designer—the Gallianos, the McQueens, the Lagerfelds—is fading.

Hermès and Brunello Cucinelli Leading the Way

Their successors, when they do exist, are often viewed as temporary placeholders, tasked with executing commercial strategies rather than leading with vision. «Brunello Cucinelli and Hermès never had creative directors, and both are probably the most successful and resilient names in the luxury industry,» Essig reminds us. The lesson? Perhaps luxury fashion never needed its eccentric geniuses after all.

And yet, for all this talk of commerce eclipsing creativity, there are signs of life. «Fashion creativity is still alive, just look at Schiaparelli Spring Summer 2025 Haute Couture magistral collection,» Essig writes.  Indeed, the avant-garde still thrives in niche corners, in the hands of those who are willing to defy commercial logic.