All that glitter isn’t worth its weight in gold — just ask the producers of the world’s luxury goods. Expensive bags, watches and clothes are sitting on shelves for longer as shoppers cut back on big buys. Instead, consumers are spending on experience goods, which are expected to grow 15% this year — at the expense of luxury goods, forecasted to grow 4%.

Drip forecasts drop: Major luxury brands, including Louis Vuitton parent company LVMH, Kering and Burberry, have lowered their sales forecasts this year — with the industry experiencing “the worst market conditions since 2008,” per online goods seller MyTheresa, which is holding 44% more inventory than a year ago.

To manage the surplus, some brands, including Burberry, are buying back unsold inventory from department stores — but others are seeking more ambitious ways to unlock their inventory without undercutting their luxury price tags and image:

• Certain brands are selling excess stock to off-price outlets, now accounting for 13% of luxury goods sales — double the figure from a decade ago (WSJ).
• Others are reportedly cold-calling unofficial resellers to offer their inventory, hoping to shift surplus supplies from Europe and North America to Asia — where the goods can be sold for a higher price.

Down goes the supply chain

The challenges faced by luxury brands are rippling through the supply chain, affecting resellers and secondary marketplaces, which have seen a slowdown in volume and demand as the price of luxury watches and designer handbags hit new lows in resale markets:

• Online luxury marketplace The RealReal (NASDAQ:REAL) sold 8% less volume in the latest quarter year-over-year.
• The founder of secondhand marketplace Farfetch made a bid to take the company private as sales slowed.

Forward-looking: As sales slowed for these luxury giants, so did their stocks. LVMH (OTC:LVMHF) was up as much as 39% this year before losing a third of its value — with similar moves from other luxury brands. But LVMH’s CFO isn’t bothered, saying it was “converging towards numbers” more in line with its historical average (CNBC).