Luxury Fashion at a Crossroads: How Real Estate, Personalisation, China’s Gen Z, AI and Wellness Can Revive the Industry

Luxury isn’t just about owning the best stuff anymore—it’s about living your best life. From how we dress to where we live and the tech we use to track every step of the way, it’s all about optimising well-being. As we close out 2024, the luxury world is shifting fast, and the ground is shaking. 

Whether it's metabolic-boosting meds like Wegovy and Ozempic or lifestyle choices like hybrid training, metabolic hacking, and biophilic design—wellness is no longer an isolated sector. It's touching everything: fashion, real estate, fitness, even the gadgets we use to stay on top of it all. Yet, as China faces an economic slowdown marked by deflation and weaker consumer spending on traditional luxury categories like handbags and jewellery, one niche remains resilient: fragrance.

French fine fragrance house Frédéric Malle is capitalising on this opportunity, recently renovating its flagship store in Shanghai—signalling long-term confidence in the market. While larger luxury categories struggle, wellness and personalisation are emerging as key drivers of consumer behaviour across sectors, from fragrances to fashion.

For instance, brands like Lululemon continues to strengthen its foothold in China with initiatives like the "Wellbeing Garden," a key part of its community-driven strategy. The brand’s emphasis on wellness and movement aligns with the rising health consciousness in the Chinese market, contributing to a 34% YoY revenue growth in Q2 2024. Lululemon’s focus on holistic wellbeing, highlighted by its latest activation in Shanghai for World Mental Health Day, underscores its ability to engage deeply with local consumers while tapping into the booming wellness trend.

Luxury brands, from fashion to beyond, are in scramble mode trying to stay relevant in this wellness-obsessed world. Iconic fashion houses like Celine and Gucci are experiencing the strain of a luxury slowdown, but this isn’t just an economic issue—it's a deeper cultural shift. Consumers, particularly Gen Z in China, are seeking more than traditional symbols of wealth. They want experiences, customisation, and products that align with their personal values, especially wellness and sustainability.

What’s driving this shift? Well, it’s a blend of factors: the rise of holistic health movements, the growing importance of digital experiences, and a new focus on personalisation. As Chinese Gen Z, a demographic known for redefining consumption patterns, moves away from classic luxury status symbols, they turn towards wellness-oriented and customised offerings. This begs the question: could the future of luxury lie in its ability to embrace wellness in all its forms?

Celine, Gucci, and Fashion's Creative Pivot Amid Changing Consumer Tastes

In luxury fashion, creative leadership is always a signal of bigger shifts in the industry. Take Celine—they just tapped Michael Rider as the new artistic director, stepping in for Hedi Slimane. Rider’s timing couldn’t be more crucial. Luxury today isn’t just about exclusivity anymore; it’s about meaning, connection, and staying relevant. With his Polo Ralph Lauren experience and deep Celine roots, Rider’s got to juggle keeping the brand iconic while bringing in a fresh perspective for today’s changing crowd.

Meanwhile, Gucci, another luxury giant, has been grappling with its own challenges. The brand’s first-half revenue fell by 20% in 2024, a stark reflection of the global slowdown in luxury demand. While economic pressures certainly play a role, Gucci’s struggle to regain momentum under new leadership highlights deeper cultural shifts in what consumers are looking for. Stefano Cantino, the new CEO, steps into a brand in flux—Gucci’s stuck between its old-school luxury roots and the need to vibe with younger, more digital, and culturally tuned-in buyers. The challenge for Gucci, and indeed for the broader luxury industry, is to engage this new demographic while maintaining the allure of high-end exclusivity.

This generational shift is particularly pronounced in China, where Gen Z consumers are redefining what luxury means. While still interested in high-end fashion, they are less inclined to purchase traditional luxury status symbols. They still love high-end, but they’re ditching old status symbols for brands that offer customisation, align with their values, and live in the digital space. Brands like Gucci and Celine must now navigate this tricky balance: 

How do they maintain their historical prestige while speaking to a generation that seeks individual expression over status?

Luxury Real Estate and AI’s Role in Wellness

While fashion brands like Celine and Gucci are grappling with creative transitions and shifting consumer tastes, the luxury real estate sector has found a different way to stay relevant in a changing market: by embracing wellness and AI. Real estate, traditionally a slower-moving segment of the luxury market, is experiencing a revolution driven by consumer demand for spaces that prioritise health, technology, and convenience. Today’s high-end buyers, particularly those in markets like China, are no longer satisfied with opulence alone—they want homes where wellness is baked into every part of their life.

According to Berkshire Hathaway HomeServices 2024 Luxury Landscape Report, 60% of luxury buyers prioritise wellness amenities, such as biophilic design, hybrid training spaces, and smart fitness technology like the OURA ring and Peloton, when selecting homes. Additionally, 70% of buyers are after turnkey, move-in-ready homes, showing that ease and customisation are at the top of the list. It’s all part of a bigger shift—luxury’s moving toward holistic living, where wellness isn’t just a perk, it’s the baseline.

AI is stepping up big time to meet these demands. Luxury real estate agents are using it to serve up hyper-personalised picks—from analysing walkability to tracking down homes with wellness perks like air filtration or soundproofing for mindfulness. AI is even customising the small stuff, like dining spots or which streets are closest to organic grocery stores and pilate studios.

This shift is exactly what luxury fashion needs—personalisation and wellness front and centre. The fusion of tech, health, and high-end living makes it clear: the future of luxury is all about how seamlessly it integrates into everyday life. Just like real estate buyers want homes that support their well-being, fashion consumers are after brands that elevate their lifestyle. For luxury brands, that means customisation and tech are key. The ones tapping into data-driven insights, wearable tech, and personalised designs will win over the health-conscious, tech-savvy crowd.

Gen Z in China and the New Blueprint for Luxury Consumption

280 million strong, China’s Gen Z are dominating the future of luxury consumption. And, while economic factors like inflation and market slowdowns are often cited as the main reasons for declining luxury sales, the reality is more complex. Nowhere is this more evident than in China, where Gen Z consumers are redefining luxury in ways that older generations never anticipated. With a significant portion of global luxury sales relying on Chinese consumers, understanding the shift in their preferences is critical for any brand hoping to stay relevant.

Gen Z in China, unlike previous generations, has little interest in traditional luxury status symbols. Brands like Louis Vuitton and Gucci may still be household names, but they no longer hold the same aspirational power. Instead, Chinese Gen Z is focused on a blend of local and global influences, seeking products that are personalised, culturally relevant, and aligned with their values around sustainability and wellness.

Customisation is one of the key factors driving their spending habits. Chinese Gen Z is less interested in buying luxury items simply for their logos, and more interested in products that allow them to express their individuality. This has fuelled the rise of streetwear brands like Li-Ning and Peacebird, as well as global favourites like Nike and Adidas, which often release limited-edition or customisable items. Fashion, for them, is a canvas for personal expression, and brands that allow for this level of customisation are thriving.

Wellness is on the rise, big time. The global buzz around GLP-1 meds like Wegovy is part of a bigger trend—consumers are laser-focused on health and longevity now more than ever. In China, this trend is evident in the increasing popularity of wellness products, from smart fitness devices to clean beauty brands like Perfect Diary and Florasis. Gen Z’s affinity for these products is also linked to their preference for transparency and sustainability—two qualities that many traditional luxury brands have been slow to embrace.

Gen Z is ditching traditional luxury for a digital-first lifestyle. Brands that blend digital experiences with luxury are winning them over. Virtual goods and digital fashion on platforms like Douyin and Bilibili are flipping the script on what 'luxury' means. From avatars to virtual collections, spending is shifting toward immersive digital experiences over physical status symbols.

For fashion brands, this means a fundamental shift in strategy is required. Chinese Gen Z demands brands that are digitally integrated, sustainable, and culturally resonant. Those that continue to rely on heritage, prestige, and classic luxury symbols will find themselves left behind in a market that is rapidly evolving.

What THE GOODS Sees Coming: The Future of Luxury

As luxury faces a period of transition, brands that embrace customisation, wellness, and digital integration will be the ones that lead the charge into the future. The luxury slowdown we are witnessing is not just a temporary dip; it’s a signal that consumers, especially in key markets like China, are demanding more from their brands. This demand is not simply about exclusivity—it’s about personalisation, sustainability, and a deeper connection to well-being.

Here’s what THE GOODS sees coming for the future of luxury:

1. Wellness as the Cornerstone of Luxury
   From metabolic hacking to hybrid training and smart fitness wearables, wellness is no longer a fringe trend—it’s becoming the essence of luxury. Brands that fail to integrate health-conscious elements into their products and experiences will struggle to keep pace with the new consumer demands.
2. Customisation Will Redefine Prestige
   The traditional appeal of luxury brands, rooted in status symbols, is evolving. Consumers, particularly Gen Z in China, are prioritising individuality and customisation. Limited-edition products, personalised designs, and the ability to express one’s unique style will become critical components of brand strategy.
3. The Digital Luxury Experience Will Dominate
   With the rise of digital fashion and immersive virtual worlds, the future of luxury will increasingly live in digital spaces. Brands must adapt to this shift by integrating digital experiences that complement their physical offerings. From virtual goods to interactive shopping environments, digital will be a key battleground.
4. Sustainability Will Be Non-Negotiable
   As Chinese Gen Z drives demand for eco-conscious products, sustainability will become a non-negotiable element of luxury. Brands that authentically commit to ethical production, transparency, and environmentally friendly practices will gain consumer loyalty, while those that lag will risk losing relevance.
5. AI Will Power the Next Phase of Customisation and Wellness
   As seen in the luxury real estate sector, AI has the potential to offer hyper-personalised experiences that cater to consumer wellness and lifestyle preferences. In fashion, AI can drive data-driven customisation, enhance customer engagement, and provide deeper insights into consumer behaviour.

Luxury’s at a turning point. Brands have a golden opportunity to redefine what high-end means by embracing the future. Those who double down on personalisation, wellness, and digital will soar. Gen Z wants their style unique, their products custom. Brands that get this right will win big. But if you’re still clinging to old-school prestige, you’re about to get left in the dust. 

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‍THE GOODS take reports on a piece of leading marketing news and presents our editorial team’s analysis of the key implications for the brand marketing industry.

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