Luxury Unfiltered: Trade wars, recession risks and uncertainties mean brands must conduct brutally honest audits now

April 9, 2025

Daniel Langer is the founder and CEO of consulting firm Équité

The luxury industry is facing one of its most challenging periods in recent history.

Trade wars, recession risks, and eroding consumer trust have created a perfect storm that threatens even the most established brands. Compounding these challenges are unprecedented recent price hikes that many brands implemented, some exceeding 50 percent, and declining product quality, which have alienated customers and led to significant trust erosion.

According to Bain & Company, nearly half of luxury consumers now perceive brands as overpriced, a sentiment echoed in my own interviews and roundtable discussions with clients. This makes the luxury industry particularly vulnerable in times of uncertainty.

As a result, luxury brands would be foolish to just do business as usual and increase prices without first assessing where their weaknesses are and if their storytelling is unlocking enough perceived value. Too many brands operate in the sea of sameness and lack differentiation. This is deadly when clients look for inspiration in turbulent times.

This erosion of trust is not just a temporary setback. It signals a fundamental shift in how consumers evaluate luxury. Younger generations, in particular, are questioning whether the value they receive from luxury brands justifies the steep prices.

Many feel uninspired by the stories and experiences brands are presenting and feel disconnected from their offerings. This disconnect is deeply problematic because luxury thrives on emotional engagement and the ability to inspire clients through extraordinary value creation.

In times of uncertainty, luxury brands cannot afford to operate on autopilot or rely on outdated strategies. It is critical to recalibrate their approach to value creation, starting with a brutally honest brand audit.

A brand audit is not just an exercise in self-reflection. When it is done right, it is a powerful and strategic tool for identifying vulnerabilities and opportunities that can make or break a brand during turbulent times. My clients often tell me, following a brand audit, that it was the single most critical project they ever did.

When we conduct audits for luxury brands, we often find that previous internal assessments are overly optimistic or lack objectivity. This is understandable and even expected.

People within an organization naturally want to see their efforts in a positive light. They also often understand that certain topics may be taboo internally and, therefore, just take things for granted, which significantly weakens their ability to inspire clients.

In a recent project for the board of one of the most iconic luxury brands, we found more than five critical issues, overlooked or underestimated internally, which would significantly weaken their ability to win. Because they were identified in the external audit, these potential blind spots were addressed, and misguided strategies were avoided.

Another example I see repeatedly across categories is that many brands fail to recognize how disconnected their messaging or client experiences have become from consumer expectations. During a recent trip with a European airline in business class, the lack of product and service quality was staggering.

My suspicion is that the airline simply benchmarked with regional competitors, ignoring that for travelers from other regions, the service offering was a fiasco. “We always did it this way” is not an excuse and not helpful when client expectations shift rapidly.

As Generation Z is starting to swiftly dethrone the previous generations as the most important client group for luxury, strategies of yesterday and today will fail with the clients of tomorrow. The additional geopolitical uncertainties and recession risks simply compound the need for brands to question everything, reassess, and act strategically and tactically on the findings. When storytelling lacks emotional resonance, brands will lose dramatically when times get tough.

An external audit brings an unbiased perspective that uncovers these critical gaps while providing actionable insights for improvement. It allows brands to assess whether core values resonate with their target audience and whether their messaging aligns with the emotional aspirations of discerning clients. Without this clarity, brands risk taking measures that fail to address the root causes of their challenges. In many cases, they even exacerbate them further.

Luxury is about extreme value creation, period. This is the ability to inspire clients and make them deeply care. You will only lead the change if they see your brand as extraordinary and worth the premium price.

This perception cannot be achieved through superficial adjustments or reactive measures. Inspiration requires a deep understanding of what drives client loyalty and how your brand can uniquely deliver on those expectations. A comprehensive audit provides the foundation for this understanding, enabling brands to recalibrate their strategies based on brutally honest and sharp real-world insights rather than assumptions.

The stakes have never been higher for luxury brands navigating this volatile environment. Therefore, conducting a systematic brand audit before (over-)reacting or taking the wrong measures is not optional or nice to have, it’s essential for survival. Brands that take this step will be better positioned to weather the storm and emerge stronger, while those that don’t risk irrelevance in an increasingly competitive market.

Luxury Unfiltered is a weekly column by Daniel Langer. He is the CEO of Équité, a global luxury strategy and creative brand activation firm, where he is the advisor to some of the most iconic luxury brands. He is recognized as a global top-five luxury key opinion leader. He serves as the executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at New York University, New York. Dr. Langer has authored best-selling books on luxury management in English and Chinese and is a respected global keynote speaker.

Dr. Langer conducts masterclass management training on various luxury topics around the world. As a luxury expert featured on Bloomberg TV, Financial Times, The New York Times, Forbes, The Economist and others, Mr. Langer holds an MBA and a Ph.D. in luxury management and has received education from Harvard Business School. Follow him on LinkedIn and Instagram, and listen to his Future of Luxury Podcast.

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