Luxury Lost 70 Million Buyers. True Rarity Is the Fix

After three decades of heady growth, luxury is learning that its most profitable trick—artificial scarcity—now has a price. In April 2023, LVMH briefly became Europe’s most valuable company. The celebration didn’t last. Estée Lauder’s shares have fallen 35% since the start of 2024; Hermès is down 34% so far in 2026; Richemont has shed 15%.

The deeper number is the 70 million consumers Bain estimates luxury lost between 2022 and 2025. That isn’t a demand dip. It’s a structural reset.

The old playbook is now the problem

Luxury grew by doing three things at once: leaning on heritage, pushing prices above functional value, and rationing supply. That playbook is now producing diminishing returns.

• Innovation recession. Hermès still leans on the Birkin (1984) and the Kelly (a 1977 rebrand of a 1930s bag). Bernstein estimated in 2023 that these two icons alone drive more than 13% of the brand’s annual revenue—a sign that the future is crowded out by the past.
• Reputational recession. Post-COVID price rises far outpaced any improvement in utility. In an inflationary, polarised economy, that gap reads as greed, not exclusivity.
• Technological disruption. Chinese automakers NIO and Yangwang are redefining what premium means in China, challenging even Lamborghini and Mercedes-Benz.

Why “rare” stopped feeling rare

There’s a difference between artificial scarcity and true rarity. Artificial scarcity is a marketing choice: you produce plenty but release a few units, or you raise prices faster than value. True rarity comes from genuine constraints—craft time, material availability, or a genuinely new object that no one else can make.

When billionaires can buy almost anything, they stop chasing handbags and start chasing one-of-a-kind assets that reduce other billionaires’ options—say, a house on an untouched coastline. That is scarcity you can’t fake.

What brand leaders should do

The fix isn’t to abandon scarcity; it’s to make it real again. The source points to pre-1990s luxury’s discipline: short supply chains, made-on-demand models, and true rarity. For marketers, this means using scarcity only when a constraint is genuine. If you cut supply while functional value stays flat, you may be training customers to leave.

Instead, build the next generation of desirable products, shorten the path from order to delivery, and make limited editions mean something—a material, a craftsperson, a capability—not just a colourway. Luxury’s lesson travels beyond luxury: any brand that depends on manufactured rarity, inherited icons, or price-without-value will eventually face the same 70-million-person arithmetic.

Source: Fast Company