Few are asking that question more than Dana Thomas, the Paris-based fashion writer best known for her book "Deluxe: How Luxury Lost Its Luster," which documents and criticizes the rise of the mass luxury market.
The book was written during the luxury explosion of the Nineties and early 2000s as brands became global corporations fueled by seemingly unquenchable consumer demand.
But a year after the book's release, the economic underpinnings that girded the market's growth have collapsed. Time for a second edition?
Not yet, but Thomas is staking a few claims about luxury's future.
"There will be a backlash to the globalization of luxury," she said during a interview from her home in Paris. "We're entering a time of asceticism where people spend what they can afford and reject conspicuous consumption."
That, she says, will force executives to shift their expectations, too.
"I remember talking to an executive at Louis Vuitton about the Japanese market," she said. "At the time 40 percent of Japanese owned a Louis Vuitton monogram product. I asked him if he was concerned about saturation. He told me he wouldn't be happy until they had 100 percent. My god, do we really want every person in the world to have their product? That's not the world we live in any more."
The former Newsweek reporter and regular contributor to the now-defunct Portfolio took a similar view in her book, in which she dissects how family-run companies like Louis Vuitton and Prada became corporate behemoths. In a contention that was disputed by some industry executives, Thomas argued that luxury's breathless growth cheapened the concept of luxury -- and that, in the end, the snowball would ultimately be unsustainable.
"We were overluxed," she said of the time before the crash. "For awhile everywhere you went something else was luxury: luxury hotels, luxury magazines, luxury gyms. I remember Tom Ford calling me on the phone to say he'd just seen a condo complex off the Long Island Expressway marketing itself as luxury condos." If this is luxury, she recalls him saying, then we are really in trouble.
And yet some of the companies that Thomas documents in her work have yet to succumb to the economic woes that are paralyzing other segments of the apparel industry.
LVMH MoÃ«t Hennessy Louis Vuitton recently predicted the company will show "superior resilience" to the economic downturn. Sales in its Louis Vuitton brand have yet to falter. HermÃ¿s reported less profitability in 2008 but saw its first quarter 2009 sales climb 3 percent -- not shabby in an environment in which once solvent companies are flirting with bankruptcy.
But those companies tend to be the exceptions. Earnings at Compagnie FinanciÃ¿re Richemont, Prada and other firms fell last year, and luxury retailers like Saks Fifth Avenue and Neiman Marcus are seeing regular comparable-store sales declines.
For luxury consumers, as many as half of households with annual income between $100,000 and $250,000 are buying less expensive goods, according to a new forecast by PricewaterhouseCoopers and Retail Forward. And few are predicting that the rampant spending of the aspirational customer will ever return to the frothy exuberance of 2007.
Now that the fundamentals have changed, Thomas predicts the old model as doomed. "Companies will go under," she said. "There is a saturation point."
While she plans on writing a follow up to "Deluxe," she says a sequel won't hit bookstores anytime soon. "We're living through this major shift now; it may take years to understand how it will impact the business," she said.
In the meantime, she said the high-end market will develop a more boutique sensibility.
"I feel big luxury will get bigger, but there will be a growing number of luxury refugees who will want to go back to the old way where companies made a small amount of beautiful things for a niche clientele," she said.