European luxury is facing a challenge, and it's time to learn from the Americans! The fashion industry is evolving, and some of our beloved European brands are struggling to keep up. But here's the twist: American fashion, often seen as too commercial, is now leading the way with innovative strategies.
Imagine this: Todd Kahn, CEO of Coach, was shopping for a simple gift in a European luxury store. He asked for a ribbon to add a touch of elegance to his purchase, but was denied! The reason? Ribbons were reserved for those who bought a certain tier of products. Kahn was shocked, and rightly so. This elitist approach, he believes, is the exact opposite of what American fashion stands for.
For years, European luxury brands have enjoyed a prestigious status, with their rich heritage and headquarters in fashion capitals like Paris and Milan. But lately, the tide has turned. These brands are being criticized for lacking innovation and failing to connect with their core customers. Sound familiar? It's a similar story to what Coach and Ralph Lauren faced not so long ago.
European luxury giants like LVMH and Kering are reporting declines in revenue, while American fashion brands are thriving. Ralph Lauren and Coach have seen 19 consecutive quarters of sales growth, with the former's revenue surpassing that of Gucci. Tory Burch has received critical acclaim for her unique approach, and New York-based labels like The Row and Khaite are making waves at luxury price points.
But it's not all smooth sailing for American brands. Calvin Klein's Collection line hasn't seen a sales boost, and Michael Kors is struggling. Yet, the biggest American brands are still making most of their sales at non-luxury prices. So, what's their secret?
These brands have mastered the art of elevating their brand and products while being strategic about distribution, targeting the right customers, and most importantly, raising prices without sacrificing growth. These lessons are crucial, especially in the American market, which will be key to the recovery of European luxury.
The Business of Fashion sat down with top executives from successful American brands to uncover their secrets. Pierre-Yves Roussel, CEO of Tory Burch and former CEO of LVMH's fashion group, shared his insights. He believes American fashion has always had a pragmatic approach, focusing on staying close to the customer and offering products with great intrinsic value.
In today's cautious shopping environment, American fashion's strengths are shining through. Historically, American brands were labeled as too commercial, but this mindset has its advantages. These brands have learned from their mistakes, pulling back from outlet malls and wholesale partnerships, and focusing on convincing customers to pay full price in their own stores. Tory Burch, for example, now generates 85% of its sales directly.
The commercial mindset is reflected in the products themselves. American brands aim to create practical, wearable pieces that cater to their customers' needs. Even special, unique items are designed with everyday wear in mind. Take Khaite, for instance, where CEO Brigitte Kleine emphasizes the balance between runway fantasy and everyday functionality. Their Spring 2026 show featured both jeans and blazers, as well as a handknit two-piece set.
American brands have mastered the delicate balance between fantasy and function, something that was lacking in the recent Milan and Paris fashion weeks, according to critics. The influence of sportswear, a cornerstone of American fashion, is more prominent than ever, says Roussel.
Creative continuity and consistency are also key. While European brands are often rooted in craft or fashion, American brands focus more on lifestyle. This approach resonates when it reflects the founder's own life, like Ralph Lauren's Western-inspired designs influenced by his Colorado ranch, or Khaite's downtown cool reflected in its store design and music choices.
Creative continuity is further enhanced by the stability of American brand leadership. Unlike European maisons, where creative directors frequently hop from house to house, American brands have longer tenures. Most creative directors are founders, like Tory Burch, Ralph Lauren, or Khaite's Catherine Holstein. Others, like Coach's Stuart Vevers, have been in their roles for over a decade.
This longevity allows for a creative vision to develop, resonate with shoppers, and evolve over time. As Kleine puts it, "You develop a fluency with your client, so you know how she's evolving. As you get to know her more, it builds confidence, so you can design with more intentionality."
American brands have a deep understanding of their target customers. For Coach, it meant creating Gen Z-friendly apparel to attract younger customers. Khaite appeals to a cross-generational audience by speaking to a downtown sensibility, while Ralph Lauren interprets classic Americana in countless ways. Keeping production in-house, like Tory Burch does for its homeware extensions, helps maintain this connection.
As fashion conglomerates push for growth, the pressure to expand has intensified. This has led to European luxury price hikes that far outpace inflation. But with consumer sentiment waning post-pandemic, providing a strong value proposition is crucial.
It starts with offering financially attainable products. Even at the top of the pricing spectrum, brands like Khaite ensure they have accessible pieces for entry-level luxury shoppers. Chanel and Dior, on the other hand, have very few items under $1,000, mostly small accessories.
Tory Burch emphasizes the importance of variety in price points, reflecting real-life shopping habits. Arnault, CEO of LVMH, acknowledges the need for focus and refinement, stating, "We have already many product lines to develop to refine further."
Luxury is about the entire experience, from marketing moments that intrigue and connect with consumers, to the in-store shopping treatment. Scarcity generates interest and hype, but it mustn't alienate customers. As Coach's Vevers puts it, "Exclusivity stems from exclusion, which is arcane and a barrier. You scale a brand by opening up the conversation... desirability is more relevant than exclusivity."
American fashion's lack of prestige compared to Europe has its benefits. It forced brands to focus on more than just longevity and status. The changing dynamics of fashion have allowed American designers to reclaim their power. As CFDA CEO Steven Kolb says, "American fashion has always been looked down on as too commercial. But isn't that the point? I wouldn't say that's gone away, but Americans have gotten more confident in what we do."
So, what do you think? Should European luxury brands take a page from the American fashion playbook? The debate is open!
