Considerations: The cost of a failing luxury client experience
The BoF and McKinsey report tells the industry what its customers have been trying to say for years. Is anyone listening?
Earlier this week, the Business of Fashion published a new joint report with McKinsey, The State of Fashion: Face to Face with Luxury Clients. There’s a number buried in the report which I continue to reflect on. $70–90 billion. That’s the estimated value sitting in the aspirational and established luxury clients which the report defined as the those spending between $5,000 and $50,000 on luxury each year. It’s described in the report as meaningful growth potential for the industry. What’s not plainly said however, is that post pandemic, the luxury industry deliberately pivoted away from the aspirational client. Cue the luxury market downturn and the existential questions that followed.
The catalyst? Between 2019 and 2025, average luxury retail prices rose 61%. Brands moved upmarket during the post-pandemic spending frenzy, concentrating attention on clients least sensitive to economic headwinds. Exclusivity, scarcity and barriers to entry caused by price increases. The aspirational and established client who was spending seriously, who was genuinely engaged and placed huge emotional value on luxury brands was deprioritised. The clients noticed, the clients withdrew. The clients questioned what genuinely is the value of luxury, what is its purpose.
The $70–90 billion isn’t strictly a forecast rather the aggregate cost of lost profit from this buoyantly spending group of clients. It’s the luxury industry’s short-sighted decision, quantified.
The report’s headline finding, that emotional connection is the top driver of luxury brand desirability in both the US and China, placed ahead of craftsmanship, heritage, and logo recognition is unsurprising given the ongoing existential crisis we’re having about the value of luxury. You can’t put a price tag on emotional connection, an intangible value which the client themselves determine, not the brand.
But identifying emotional connection as the driver is not the same thing as understanding what creates it. And the executive priorities the report proposes, (including AI discovery investment, loyalty programme redesign, algorithmic visibility, clienteling metrics) are overwhelmingly brand-side responses to what at its root is a client experience problem. The mechanics of relationship are being addressed, while the quality of understanding within that relationship remains unchanged. Transactional, not relational.
More pressingly, the industry has identified a discovery problem whereas the client is experiencing a relationship problem. Those require different solutions entirely.
What I find most curious is the over-indexing on AI discovery as the solution but not for the problems actually identified in this report. Around half of established US luxury clients now use AI for shopping inspiration. 50% use it to evaluate brands before they step foot into a shop. This is a genuine shift in how discovery happens. The data it generates about what clients are searching for, how they are comparing products, where they’re at in their decision is genuinely valuable intelligence about who they are and how they transact.
The mistake I foresee is treating that intelligence as the end point rather than the starting point. AI used well provides the personalised insights that free up a sales associate’s time to deliver a high-value, highly personalised experience for their client. AI used poorly is a replacement for that human judgement and connection. A recommendation engine that knows the client’s purchase history but not their context, their body, their emotions, could surface the right item but it can’t contextualise it, can’t foster the emotional connection we feel as clients, not just because of brand heritage but because of the experience, the relationship.
Fashion, style, and taste are not transactional categories. They are deeply personal ones, deeply human, built on the kind of nuanced understanding that no algorithm has yet replicated, and that no snobby or pushy sales associate could ever foster. The intelligence that AI provides only becomes valuable when it enhances human connection, not when it substitutes for it.
The client experience of luxury is currently broken across every touchpoint and the digital layer is only the newest addition to a longer-standing failure. Having led digital transformation and service and care model redesign in the NHS, I know this terrain. The same principles apply across any complex service system: the service exists to serve the client, not the system. What problems are clients experiencing? What are their pain points? And critically, what is the root cause? We need to treat causes, not symptoms. Same for the NHS, same for luxury retail.
In physical retail, the report is direct: poor in-store experiences have become a major pain point in the US. The root cause runs deeper than the symptoms the report lists: pushy sales tactics and long queues. The in-store experience is still largely designed around transaction. The metrics used to evaluate it still primarily measure conversion and spend-per-visit. You can’t manage what you can’t measure. And right now, the industry is not measuring the thing that matters most.
It’s a measurement problem as much as a design problem. You get the client experience that your incentive structure produces. Sales associates evaluated on same-day sales cannot prioritise the slower, more demanding work of actually getting to know someone. The result is the experience clients are describing in the report: feeling like a prospect rather than a person. Think of visiting your GP and listing your symptoms, a transactional exchange that doesn’t truly represent who you are or what might be causing your ailments. In healthcare and in luxury retail, we all want to be truly seen and heard.
The report’s most consequential recommendation, to redesign store success metrics around relationship quality rather than immediate sales, would require a more fundamental rethink of the luxury retail model than any technology investment. It is also the recommendation least likely to be acted on quickly, because it asks the industry to stop measuring the thing it has always measured, and to quantify something that resists standard and consistent measurement. That tension is not unique to retail. It is one of the most persistent structural and cultural challenges in any service transformation, and one I encountered repeatedly in the NHS.
Conversely, 68% of US luxury clients say smaller, independent labels better reflect their identity than the legacy houses. These brands aren’t winning on craftsmanship or heritage. They’re winning because they have fewer clients and they know each one better. They have removed barriers to entry and treat the understanding of the individual as the work itself, not as a precondition for a sale. The report illustrates this through Jessica McCormack’s CEO, who describes her client advisors as the key to everything: the people on the ground who know their clients well enough to anticipate needs, who understand not just what was bought but why, and for what life. That is not a technology capability. It is a human one, it is relational, made more powerful by the right intelligence sitting behind it.
The upwards of $90 billion sitting in underserved clients will not be unlocked by a better recommendation engine or a more sophisticated loyalty tier. It requires a re-imagination of the luxury retail model, enhanced by AI and technology, but delivered by people equipped with insight, time and capability to invest in real human connections with the aspirational and established clients the industry chose to exclude.
References
The State of Fashion: Face to Face With Luxury Clients, McKinsey & Company and BoF Insights, June 2026
