Luxury retail is hitting a generational speed bump. Once buoyed by the spending power of older millennials and Gen X, high-end fashion and beauty brands are now facing a slowdown, with Gen Z opting out of traditional luxury splurges.
Most recently, global markets from Paris to Shanghai have reported sluggish sales, prompting concerns across the industry. At the same time, the secondhand apparel market is booming. Thredup’s 2024 Resale Report projects it will reach $350 billion by 2028, growing three times faster than the overall global apparel market. The rise of resale isn’t just a trend; it’s a signal that younger consumers are actively reshaping what luxury means.
According to recent research, Millennials and Gen Z are projected to account for three-fourths of global luxury spending by the end of 2025 – a figure that makes this pivot in taste and behavior impossible for brands to ignore. Conspicuous consumption is losing appeal for a generation raised amid climate crises, economic instability, and digital transparency.
The Rise of Secondhand and Sustainable Shopping
For a generation raised on side hustles and climate consciousness, the resale rack holds more appeal than the luxury boutique. Platforms like Depop, Vestiaire Collective, and The RealReal have become go-to destinations for Gen Z shoppers, trading upcycled finds and limited-run vintage pieces with the same enthusiasm that previous generations reserved for fresh-off-the-runway collections.
Sustainability is part of the draw, but so is value – why spend $2,000 on a new designer bag when you can score a rare archival piece for half the price?
Luxury brands are paying attention. Some, like Gucci and Balenciaga, have partnered with resale platforms or launched in-house re-commerce programs to capture a slice of the growing circular economy. But for Gen Z, these moves only matter if they appear real, not reactionary.
Designer Status Loses Its Shine
Flashy logos are no longer the badge of status they once were. For Gen Z, luxury is shifting away from overt branding and toward values like individuality, sustainability, and authenticity. Rather than chasing the latest drop from heritage houses, young shoppers lean into personal style, often expressed through vintage, upcycled, or indie-label finds.
Many industry reports show how Gen Z consumers consider sustainability a primary factor in their clothing choices, outranking brand prestige. This is reflected in their growing reliance on secondhand platforms and their preference for products that align with their ethics and identity.
A carefully curated thrift-store find or a niche designer piece carries more cultural capital than a mass-produced luxury item. For legacy brands, the challenge is clear: status isn’t just about labels anymore; it’s about meaning.
Economic Pressures Meet Conscious Consumption
Inflation, student debt, and rising housing costs are prompting Gen Z to reassess their spending habits. While their overall spending power is rising, many are adopting frugal lifestyles, not just out of necessity but as a reflection of their values. Movements like “no-buy” and “low-buy” challenges have gained traction on platforms like TikTok, encouraging participants to limit their purchases to essentials. Financial pressures and a growing awareness of environmental and mental health concerns influence this shift.
Discretionary spending in the US is slowing, with luxury fashion down 12% in 2023 and another 9% in 2024, according to the Bank of America Institute. The drop signals a shift toward more intentional, value-driven consumption.
Environmental concerns also play a significant role. Deloitte’s 2024 Gen Z and Millennial Survey ranks climate change as one of the top concerns for younger consumers, influencing their preference for sustainable and ethically produced goods.
This financial restraint isn’t just shrinking purchases; it’s redirecting loyalty toward brands that reflect cultural roots and values.
Local Labels and Cultural Loyalty
Global luxury brands are facing increasing competition from a surge of homegrown talent. Gen Z consumers gravitate toward local designers who blend traditional craftsmanship with modern aesthetics and sustainable practices in markets like Indonesia and Japan.
In Japan, brands like Kapital and Visvim have garnered attention for their artisanal approach and deep cultural roots. Kapital, founded in Kojima, Okayama, is celebrated for its unique designs that draw inspiration from vintage Americana and Japanese heritage. Visvim, established in 2001, is known for its meticulous craftsmanship and commitment to quality, attracting a loyal global following.
In Indonesia, labels such as Sejauh Mata Memandang lead with textile collections grounded in local heritage and environmental consciousness. The brand applies slow fashion principles, utilizing sustainable materials and traditional techniques to create pieces that resonate with environmentally conscious consumers.
These local labels often operate on smaller scales and with slower production cycles – an intentional contrast to the fast-paced churn of global fashion. For Gen Z, the appeal lies in purchasing pieces that feel personal and principled, rooted in their cultural identity and values.
A Digital Pivot to Stay Relevant
As Gen Z’s digital engagement deepens, luxury brands increasingly explore virtual platforms to connect with this tech-savvy demographic.
Gucci launched the “Gucci Garden” experience on Roblox in 2021, offering an interactive virtual exhibition celebrating the brand’s creative vision. Players could explore themed rooms inspired by Gucci’s campaigns, with their avatars absorbing elements of the exhibition and transforming into unique digital artworks.
These initiatives reflect a broader shift in the luxury industry, where digital interactions increasingly influence consumer behavior. According to Bain & Company, approximately 70% of luxury purchases are influenced by online engagement, even if the final sale happens in-store.
To further enhance personalization, brands like Louis Vuitton invest in AI-driven tools to tailor marketing campaigns and product recommendations based on consumer behavior. For Gen Z, it’s not just about the product; it’s about the experience.
Rethinking Luxury for a New Generation
Legacy brands are learning that Gen Z wants more than a product – they want a point of view. In response, some of fashion’s biggest names are beginning to reframe luxury not as excess but as intention.
Burberry and Stella McCartney have rolled out repair and resale services, tapping into the circular economy. In 2023, LVMH announced plans to expand its environmental initiatives through Life 360, a roadmap focused on sustainable design, regenerative agriculture, and product longevity. Smaller labels are going even further, with capsule collections made entirely from deadstock fabrics or upcycled materials.
But authenticity remains the dealbreaker. Gen Z is adept at detecting greenwashing and is quick to call it out. A flashy sustainability pledge means little without visible follow-through, and younger consumers are doing their homework.
The path forward for luxury brands will likely require more than a seasonal campaign. It will take real investment in ethical production, meaningful storytelling, and experiences that resonate across digital and physical worlds. For a generation redefining value on its own terms, prestige alone no longer sells.
The Bottom Line
Luxury’s future won’t be built on legacy alone. With Gen Z rewriting the rules of status, style, and spending, brands that once thrived on exclusivity now face a different challenge: staying relevant in a world where authenticity, transparency, and values matter just as much as design.
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