BofA analysts, led by Ashley Wallace, said in the Thursday note that the retail trend of leaning toward subtle, logo-less designs has hurt the luxury industry.
"'Quiet luxury' is still in fashion. But it has created lower barriers to entry/scale and fuelled copycats/dupes," the note read.
For instance, quiet luxury has made the combination of a "beige cashmere jumper with wide gray pants" one of the top fashion styles, the analysts said. This fit, however, is easily replicable when shopping at stores like COS or Uniqlo, the BofA analysts added.
They added that the trend toward products with no logos has lowered barriers of entry into the luxury market, which has allowed for "the rise of niche players like The Row and Khaite as true competition for share of luxury wallet."
The Row, Khaite, and Loro Piana are known for releasing clothes and accessories in solid colors and simple, structured designs.
The analysts suggested that the luxury industry should "pivot back to creativity, fashion content, and newness" instead of leaning harder into simplicity.
"In order to reestablish stronger barriers to entry, we think the logo and fashion content is important," the analysts wrote.
Quiet luxury has boosted some big brands — including Herms, which managed to reap rewards with classic designs. Herms's revenue of 11.2 billion euros, or $12.1 billion, for the first nine months of 2024 was up 14% from the same period in 2023.
The BofA note comes after a bad year for the luxury market. In 2024, luxury spending stagnated, and big brands saw their share prices drop.
The luxury industry was also hit by "aspirational" luxury shoppers — those who spent big bucks on luxury immediately after the pandemic — scaling back on spending.
Kering, the owner of Gucci, YSL, and Balenciaga, saw its stock fall more than 40% in 2024.
Luxury giant LVMH, the parent of brands like Louis Vuitton, Christian Dior, and Burberry, also saw its sales slide by 3% in the third quarter of 2024, partially due to weakened consumer confidence in China.
