Global luxury giants were once praised by capital markets and the business world as a "myth that transcends economic cycles." No matter how macroeconomic conditions fluctuated, high brand premiums, arrogant pricing strategies, and crowded offline stores always demonstrated the industry's formidable pricing power. However, since the start of this year, the sector has experienced unprecedented turbulence. As global consumer attitudes shift and the economic environment undergoes profound changes, the luxury industry is going through an accelerated disenchantment, and once-unattainable top brands are rapidly falling from their pedestals.

In this industry-wide cooling, the experience of LVMH, the world's largest luxury company, is highly representative. For a long time, group chairman Bernard Arnault frequently topped the global rich list, and the group's market value long ranked first among European listed companies. Yet the capital market's attitude has shifted over the past year or more. Data shows that LVMH's market value has fallen to around 200 billion euros (about 230 billion US dollars), a halving from its 2023 historic high, with a decline of more than 50%. This year alone, its share price has dropped by more than 30%, and the scale of market value shrinkage is approaching the severity of the global store-closure wave during the pandemic.

The chain reaction from this capital market pain is spreading quickly. LVMH has lost its long-held title as the most valuable company in France and Europe, overtaken by consumer giants such as L'Oreal, and even faces the awkward prospect of falling out of the top ten most valuable companies in Europe. Arnault's personal net worth has shrunk sharply, dropping him from the world's top ten richest list. Its core business is under pressure: the fashion and leather goods division, which includes flagship brands such as Louis Vuitton and Dior, remains the group's profit pillar, but revenue continues to decline, and the top jewelry brand Tiffany, acquired at great expense, has also fallen into a quagmire of weak growth.

LVMH's troubles are not isolated. Luxury giants such as Kering are also facing slowing growth and profit pressure at their core brands. The luxury sector, once seen as an "immune zone" during economic fluctuations, is now undergoing revaluation by capital markets. Industry analysts point out that the disenchantment of the luxury industry is by no means an accidental phenomenon caused by a single factor, but an inevitable result of brand strategies deviating from market logic.

First, aggressive price hikes are backfiring. Over the past several years, major top brands frequently raised prices sharply, trying to screen for the so-called "ultra-wealthy" by raising the threshold and to maintain high gross margins. However, without significant improvements in product materials, craftsmanship, or service, the practice of "raising prices without raising quality" has greatly damaged consumer enthusiasm. When product premiums far exceed their physical attributes and emotional added value, the public's psychological recognition of brand premiums is quietly undergoing a fundamental collapse.

Second, the main consumer groups are decoupling. The younger generation, represented by Gen Z, has profoundly changed its attitude toward luxury goods. They no longer regard conspicuous brand logos as a symbol of status or a label of success. Instead, new consumer trends represented by logo-free luxury, minimalism, and high-value alternatives are rising rapidly. Young consumers place greater emphasis on personal experience and practical value, and brand loyalty has declined significantly.

Third, core markets in Asia-Pacific and elsewhere are returning to rationality. As the core growth engine that drove the luxury industry's rapid expansion over the past decade, consumer markets in China and the Asia-Pacific region are entering a more rational and pragmatic new stage. The business model of over-reliance on Asia-Pacific shopping sprees is no longer viable. Consumers no longer blindly chase overseas luxury brands, and high-quality local brands are further diverting market demand. The impact of the second-hand market and alternatives is obvious. With the maturation and scaling of second-hand luxury trading platforms, the so-called myth of luxury "preserving and increasing value" is increasingly shattered. Many consumers realize that most luxury goods depreciate rapidly once they enter the second-hand market. At the same time, well-crafted substitutes are emerging in large numbers, further squeezing the premium space of traditional new products.

The cooling of enthusiasm for top-brand purchases marks that the global luxury industry is thoroughly bidding farewell to its era of runaway growth and entering a restructuring period that removes financial attributes and returns to value. First, the old business logic of harvesting "upward-comparing middle-class" consumers by launching entry-level leather goods and accessories is becoming unsustainable. Brands are forced into a polarized choice: either tilt completely toward a tiny group of ultra-high-net-worth individuals, or readjust pricing and product lines to align with real spending power. Second, they must operate more carefully and shrink assets. The era of blindly expanding territory through mergers and acquisitions is over. Major luxury groups are beginning to pull back, streamline non-core businesses, and concentrate resources to protect their main brands. Third, they must reshape culture and innovation narratives. When consumers are no longer moved merely by brand heritage and conspicuous prints, brands are once again trying to offer convincing design innovation, craftsmanship value, and deep cultural resonance.

Industry insiders analyze that the accelerated disenchantment of the luxury industry is both a process of squeezing out capital bubbles and a reflection of the return of consumer rationality. These top brands now stand at a new crossroads. Only by abandoning their lofty posture and re-examining the products themselves and consumers' real needs can they find a new path for survival and development in a deeply changing global market.