Why the Luxury Playbook Is Destroying the Luxury Industry

Article by Daniel Langer, originally published in Jing Daily

The luxury industry is trapped and the current macroeconomic challenges are amplifying the problem. And the most dangerous part of the trap is that from the inside, it looks like strategy.

Every major brand is running some version of the same playbook. Every category I analyze, every competitive analysis, every competitive mystery shopping assessment results in finding another sea of sameness: Influencer partnerships with diminishing returns. Logo-heavy entry products designed to capture aspirational buyers. Seasonal campaigns that blur together. Annual price increases disconnected from any corresponding investment in the client experience. Experiences that are luxury in price and ambition only but fall short of client expectations. No single brand has an obvious incentive to stop. And so nobody does.

This is a Nash equilibrium: a state where no individual player benefits from unilaterally changing their strategy. In game theory, a Nash equilibrium sounds stable. It sounds rational. What most people forget is that Nash equilibria are often suboptimal. Every player is making their best individual choice, and the collective outcome is still terrible for everyone. This is where we are in luxury.

The evidence is overwhelming. Consumer trust in luxury brands has reached a historic low. More than half of luxury clients now perceive prestige brands as overpriced. Net Promoter Scores have cratered. Over 20% of luxury clients were lost in 2024 alone, 2025 added to this trend. The top 2% of brands are growing at 7 to 12%. The bottom half of the industry is contracting. The equilibrium holds, and value is being destroyed inside it.

The question worth asking is: why do brands stay trapped when the data so clearly signals that the current playbook is failing?

Three mechanisms keep the trap in place.

The first is asymmetric risk. Breaking out of a bad equilibrium requires doing something meaningfully different from everyone else. The outcome is binary: you either leapfrog the competition or you alienate your existing client base. The upside takes years to materialize. The downside is immediate and visible. A CEO who deviates from industry consensus and fails will be held personally accountable. If the same person instead follows the consensus and delivers mediocre results can point to market conditions and survive. Corporate incentive structures actively reward staying inside the trap and punish any attempt to escape it.

The second mechanism is circular belief formation. In a Nash equilibrium, each player chooses their best response based on what they believe the other players are doing. In luxury, these beliefs have become self-referential. Every brand assumes clients want influencer-driven marketing because every other brand is investing in influencer-driven marketing. Every brand assumes entry-level logo products are essential because every other brand has them. The assumptions reinforce themselves. Nobody tests whether a fundamentally different approach would generate stronger client loyalty, higher lifetime value, and deeper emotional connection, because the perceived cost of being wrong feels existential. The Bain data proves these assumptions are wrong. The industry has not updated its strategy.

The third and most consequential mechanism is player misalignment. Nash equilibria depend on who is playing. For a founder, the brand is their life's work and their legacy. The cost of destroying it through short-term extraction is infinite. For a professional manager on a three-year contract with compensation tied to EBITDA, the cost of eroding brand equity over a five-year horizon is zero. They will have moved on before the damage becomes visible. Different players with different payoff structures produce different equilibria from the same competitive environment. The brand looks the same from the outside. The game being played on the inside is fundamentally different.

This explains a pattern that the industry has struggled to articulate. Family-controlled and founder-led brands, including Hermes, Chanel, Patek Philippe and Brunello Cucinelli, have disproportionately outperformed over the past decade. The conventional explanation attributes this to heritage or craftsmanship. The game-theoretical explanation is more precise: their governance structure aligns the decision-maker's payoff matrix with the long-term health of the brand. They can absorb short-term risk to reach a superior equilibrium that competitors under different governance cannot follow.

Hermes walked away from wholesale distribution when the entire industry was committed to it. Brunello Cucinelli refused to discount when the rest of the fashion industry was addicted to markdowns. These deliberate deviations from a bad Nash equilibrium, executed by leaders whose governance structure allowed them to absorb the short-term cost of being different.

The strategic question for every luxury CEO is not whether their brand is in equilibrium. It almost certainly is. The question is whether it is in a good one. And if the answer is no, whether the governance structure of the organization permits the kind of sustained, deliberate deviation required to reach a better position.

Most brands will not break out. The trap is comfortable. The consensus provides cover. The quarterly numbers are defensible. And the erosion of brand equity is slow enough that it remains invisible until it becomes irreversible.

The brands that will define the next decade of luxury are the ones led by people who can see the trap for what it is, and who have both the framework and the conviction to walk out of it. Are your ready?


About the Author

Daniel Langer is the Founder and CEO of Équité, a global luxury brand strategy consultancy. He is Executive Professor of Luxury Strategy at Pepperdine University Graziadio Business School and NYU. After two decades of industry leadership, he founded Équité to bring academic rigor, proprietary research, and operational precision to the way luxury brands build equity, set prices, optimize their strategies, and deliver extraordinary client experiences. He and his team advise some of the most iconic luxury brands in the world across fashion, fine jewelry, watches, automotive, hospitality, airlines and private aviation, wealth management, and wellness. He is a sought-after global keynote speaker and leads executive masterclasses on luxury strategy. He serves as a board member of MOIQ Capital in Singapore. His education includes Harvard Business School, an MBA, and a Ph.D. in luxury management. Featured in the Wall Street Journal, Financial Times, New York Times, The Economist, Forbes, Vogue, and Robb Report. Follow him on Instagram, Linkedin and his substack. Visit his personal website.