With bags mostly under $1,000 and a laser focus on Gen Z, Coach gained over 6.5 million new customers in North America last year. Its market cap has expanded roughly 140% since January 2020. The brand isn’t trying to compete with Hermès — it’s occupying the space between mass market and true luxury where consumers can trade up, or down, from their usual repertoire.
Going up means the opposite: making less, charging more, and rebuilding genuine exclusivity.
Hermès and Brunello Cucinelli have prospered during the current downturn precisely because neither diluted their position during the boom. The founder Cucinelli famously rejected a Chinese investor who urged rapid expansion, choosing instead to preserve exclusivity. “If you overdistribute your products, that’s goodbye to exclusivity,” he told the investor. “If in the stores there is a queue outside to get in, you can rest assured that there will be no one else wanting your brand in two years’ time.”
The muddle in the middle — charging Hermès prices without Hermès exclusivity, claiming craftsmanship while outsourcing production — is where the damage is being felt. Gucci and Burberry, caught in this no-man’s-land, are watching customers defect in both directions.
While both Hermès and Cucinelli shares have risen, Gucci Group’s share price has fallen 25% from its 2024 peak, while Burberry has collapsed by more than 50%. When luxury appears less scarce, it becomes less attractive.
Bernard Arnault understands this tension. “The fundamental goal is not revenue,” he once explained at an LVMH shareholders meeting. “The fundamental goal is the desirability of the brand.”
For two astonishing decades, luxury brands managed to achieve both growth and desirability. That equilibrium now appears broken, and strategy, as it eventually always does, demands choice.
Either make beautiful things for the many and price accordingly, or make beautiful things for the few and accept the constraints that come with the profits. Coco Chanel said it best: “Luxury is a necessity that begins where necessity ends.” As the industry recalibrates, the brands that remember luxury must remain beyond most people’s reach are ironically the ones that will retain widespread allure.
