This story was originally published on Modern Retail\u2019s sibling publication Glossy.<\/p>\n
The K-shaped economy is no longer a theory. It is now dictating which companies grow, which stall and which are forced to rethink their position in the market. The idea is simple: spending is rising at the top, holding steady on the value end, and hollowing out in the middle. For fashion and luxury brands, that split is reshaping pricing, assortment and long-term strategy.<\/p>\n
On Burberry\u2019s most recent earnings call on November 13, CEO Joshua Schulman described the environment as \u201cvery bifurcated and very specific, in terms of how a [luxury] brand is performing,\u201d adding that the industry is \u201cprobably more polarized than the rest of the world.\u201d That polarization has surfaced repeatedly across third-quarter earnings reported throughout November and December.\u00a0<\/p>\n
LVMH and Kering emphasized their disciplined pricing and full-price sell-through, and Richemont pointed to sustained demand at its jewelry brands, which typically command a higher price point (and a wealthier customer). LuxExperience \u2014 parent company of Mytheresa, Net-a-Porter, Mr Porter and Yoox \u2014 said growth at Mytheresa was being driven by what CEO Michael Kliger called \u201cbig-spending wardrobe-building customers,\u201d with average order values reaching record highs. Across groups, momentum is concentrated at the top end of the market.<\/p>\n
The split has also been visible further down the funnel. During Black Friday, traffic did not disappear, but it flowed unevenly. \u201cRetailers who are really focused on value are doing very well, and retailers that are really focused on a higher-income consumer are doing well,\u201d said Elizabeth LaFontaine, director of research at the location intelligence platform Placer.ai. \u201cThat leaves a lot of the traditional apparel retailers in the middle really fighting amongst themselves for the consumer\u2019s attention.\u201d In other words, the middle is no longer the safest place to be.<\/p>\n
In footwear, that divergence is playing out in pricing data. According to wholesale platform Joor\u2019s 2025 Global Footwear Analysis, published in November, shoes priced under $250 now account for 42% of market share, while the $500-$1,000 luxury tier has fallen sharply since 2021. <\/p>\n