Kering struggles to reignite luxury allure

In the luxury industry perception is everything and scarcity sells. Here French luxury group Kering finds itself at a precarious crossroads. According to insights gathered by Yanmei Tang, Analyst at research firm Third Bridge, the Paris-based luxury group is navigating a cocktail of slowing demand, brand fatigue, and an increasingly precarious global outlook.

Whilst this isn’t an existential crisis, Kering is certainly not going under, its H1 revenue figures are dire. For a group that once rode the meteoric rise of Guccification into the upper echelons of luxury fashion, the current reality is notably less shiny.

China and the United States, luxury’s two cash-rich pillars, are no longer behaving as they should. In China, the once-reliable appetite for logo-laden status symbols has been tempered by economic caution and a cultural pivot toward stealth wealth. In the US, political instability and rising living costs are eroding consumer confidence, even among the affluent.

“Kering’s biggest problem isn’t tariffs,” say the industry voices behind Tang’s analysis. “It’s that their brands just aren’t as desirable right now.”

This is where Hermès glides past the competition, selling Birkin bags and raising prices with impunity. Kering’s brands, namely Gucci and Saint Laurent, don’t currently enjoy that level of immunity. Their pricing power is limited by a faltering connection with consumers and a creeping sense of creative fatigue.

One could forgive Gucci for taking a breath after the Alessandro Michele whirlwind, but the post-Michele era has so far been more pause than pivot. Kering’s houses are reportedly spending more time “mining the archives” than carving out new visual territory. The industry has always prized heritage, but in fashion, as in tech, legacy can quickly morph into lag.

Saint Laurent, meanwhile, continues to play it safe. It sells well, but it’s not setting the conversation. And in luxury, relevance matters almost as much as revenue.

Discount culture and the luxury illusion

Even more concerning is the erosion of brand equity through distribution practices. Kering has leaned heavily on wholesale and outlet channels, a move that might satisfy short-term shareholders but comes at a long-term reputational cost. “Luxury customers expect exclusivity,” say Third Bridge experts. “But Gucci bags at a discount mall don’t scream scarcity.”

By contrast, arch-rival LVMH has remained rigid in its control of distribution, enforcing a level of pricing discipline that keeps brand value intact even when markets wobble. The difference in strategy is not just aesthetic, t’s architectural.

Then there’s the matter of leadership. Kering’s decision to rotate creative directors across its top three brands in quick succession may prove a high-risk gamble. New designers need to find their voice, which takes time. But time is exactly what Kering doesn’t seem to have. Shareholders want reassurance. Customers want inspiration.

Much now rests on the shoulders of new chief executive Luca de Meo, who previously turned around Renault, the carmaker.

The road ahead

None of this is to say Kering is in decline. It remains a formidable player, with a proven ability to reboot brands and drive growth when the pieces fall into place. Gucci’s leather goods category, for instance, continues to offer resilience, and Saint Laurent still delivers strong margins.

But in an industry where intangibles, desire, perception, mystique, are often more important than product, Kering finds itself confronting a luxury paradox: how to scale, remain exclusive, and recapture cultural relevance in a world more cynical, cautious, and over-supplied than ever before.

Turning Gucci around may take “two to three collections,” according to Third Bridge. For now, all eyes remain on the catwalk - and the balance sheet.