Luxury’s Fall from Grace: How Instagram and Overexpansion Killed Exclusivity
By Shayne Heffernan, Founder of Knightsbridge Group
June 27, 2025
Luxury used to mean something rare—handcrafted treasures, limited editions, and a sense of exclusivity that whispered privilege. Today, it’s a different story. The biggest names in luxury fashion—LVMH (LVMHF), Kering (PPRUY), Richemont (CFRHF), and Hermès (HESAY)—have flooded the market with everything from $50 coffee mugs to $5,000 handbags, turning their brands into glorified department stores. Concept stores designed as Instagram hotspots are popping up everywhere, chasing likes and foot traffic. But as the old saying goes, anything that’s a hit on Instagram is probably rubbish. The decline of scarcity has not only diluted the essence of luxury but is now hitting these brands where it hurts most: their sales.
The Instagram Trap: Concept Stores and Social Media Hype
Walk into any major city—New York, Dubai, Shanghai—and you’ll find luxury brands vying for attention with concept stores that double as social media bait. Louis Vuitton’s pop-up in SoHo, decked out with neon signs and selfie-friendly mirrors, or Gucci’s “Gucci Garden” in Florence, complete with Instagrammable murals, are prime examples. These spaces prioritize aesthetics over substance, designed to draw crowds who snap photos, post with #LuxuryVibes, and move on. LVMH, which owns Louis Vuitton, Dior, and Fendi, reported a 15% increase in store openings in 2024, many tailored for this social media crowd.
The strategy is clear: capture the attention of Gen Z and millennials, who spend hours scrolling Instagram. But there’s a catch. These concept stores, while boosting brand visibility, erode the exclusivity that once defined luxury. When a store feels like a tourist trap, packed with logo-emblazoned keychains and overpriced sunglasses, it’s hard to feel special. The Instagram effect—where popularity breeds ubiquity—has turned these brands into commodities. And as Knightsbridge Group has long advised our clients, commoditization is the death knell for premium pricing.
Scarcity’s Demise and the Sales Slump
Luxury thrives on scarcity. A Hermès Birkin bag, once a symbol of unattainable craftsmanship, required a years-long waitlist and a personal relationship with a boutique. Now, Hermès (HESAY) operates over 300 stores globally, churning out bags at a pace that undermines their mystique. LVMH (LVMHF), with 5,600 stores across its portfolio, and Kering (PPRUY), parent of Gucci and Saint Laurent, with 1,500 outlets, have followed suit, blanketing the world with retail footprints rivaling fast-fashion giants like Zara.
This overexpansion has consequences. When everyone can buy a Louis Vuitton tote or a Gucci belt, the allure fades. Data from 2024 shows a troubling trend for these publicly traded fashion houses:
- LVMH (LVMHF): Reported a 2% decline in organic sales growth in Q3 2024, with its fashion and leather goods division, including Louis Vuitton, underperforming in key markets like China.
- Kering (PPRUY): Saw a 16% drop in sales for the first half of 2024, with Gucci’s revenue falling 20% as overexposed products lost their edge.
- Richemont (CFRHF): Posted a 1% sales decline in its jewelry division, including Cartier, as consumers balked at inflated prices for widely available goods.
- Hermès (HESAY): Bucked the trend with 13% sales growth in 2024, but even Hermès faced criticism for diluting its exclusivity with more accessible product lines.
The numbers don’t lie. The flood of stores and products has made luxury feel ordinary, and consumers are pushing back. At Knightsbridge Group, we’ve seen high-net-worth clients shift toward niche brands or bespoke artisans, seeking the rarity these conglomerates no longer offer.
From Craftsmanship to Souvenirs
Once upon a time, luxury meant meticulous craftsmanship—a single artisan spending weeks on a handbag or a jeweler hand-setting diamonds. Today, the big players are mass-producing goods to meet demand. Gucci’s logo-heavy T-shirts, churned out in factories, sit alongside $10,000 dresses in the same store. Cartier, under Richemont (CFRHF), sells $200 keychains next to $50,000 watches. This democratization of luxury—offering something for every wallet—has turned these brands into trashy department stores with overpriced souvenirs.
Take Dior, part of LVMH. Its boutiques now stock everything from $30 perfumes to $1,000 sneakers, blurring the line between high fashion and mall retail. The result? A brand that feels less like an atelier and more like a gift shop. Consumers notice. Social media posts on platforms like X mock the “McLuxury” trend, with users calling out brands for selling $75 coffee mugs that scream tourist trap. When luxury is everywhere, it’s nowhere.
The Instagram Paradox
The irony is that Instagram, the very tool these brands use to stay relevant, is accelerating their decline. A viral post of a Saint Laurent concept store might drive traffic, but it also exposes the brand’s ubiquity. When every influencer is posing with the same $500 logo cap, the product loses its cachet. Kering’s Gucci, once a symbol of bold exclusivity, has leaned hard into this trap, saturating Instagram with campaigns that prioritize flash over substance. The result? A 20% sales drop in 2024 as core customers, seeking originality, look elsewhere.
At Knightsbridge Group, we’ve long warned that chasing trends over authenticity is a losing game. Luxury brands are learning this the hard way. Their concept stores, while photogenic, often feel hollow—more about the backdrop than the product. And when a brand’s value is tied to likes rather than legacy, it’s no surprise sales are slipping.
What’s Next for Luxury?
The path forward isn’t easy, but it’s clear. Luxury brands must rediscover scarcity and craftsmanship. Hermès (HESAY), despite its growth, offers a partial blueprint: limit production, focus on quality, and maintain an air of exclusivity. Smaller, independent houses like Bottega Veneta (under Kering) are also gaining traction by emphasizing artisanal work over mass-market appeal. LVMH, Kering, and Richemont need to scale back their retail sprawl and rethink their Instagram-first strategies.
For investors, the outlook is mixed. LVMH (LVMHF) remains a powerhouse, but its slowing growth signals caution. Kering (PPRUY) faces a tougher road, with Gucci’s struggles weighing heavily. Richemont (CFRHF) is treading water, while Hermès (HESAY) stands out as a resilient performer, though even it risks overextension. At Knightsbridge, we’re advising clients to look beyond these giants to emerging brands that prioritize authenticity over ubiquity.
Luxury isn’t dead, but it’s on life support. The brands that survive will be those that remember what made them special: rarity, craftsmanship, and a story worth telling. Until then, the Instagram hotspots and souvenir shops will keep churning out overpriced trinkets, proving that when luxury becomes a commodity, it’s just another product on the shelf.
Shayne Heffernan is the founder of Knightsbridge Group, a leading financial services firm specializing in institutional investment, private equity, capital markets, and blockchain innovation. With over 40 years of trading experience in Asia and a track record of managing high-value startups, Heffernan provides expert insights into global markets and economic trends.
