Historically, luxury fashion brands have enjoyed strong pricing power, meaning that they can apply considerable increases without necessarily losing customers. But in 2023, price tags hit eye-watering highs — and there has been no sign of the trend slowing.According to the data company EDITED, average luxury prices are up by 25 percent since 2019. Many brands attribute their increases to everything from inflation and the balancing out of regional price disparities to the fallout of the pandemic and impact of the war in Ukraine. But for many of luxury fashion brands, the uptick has been taking place over a longer timeline.
Take Chanel, where handbag prices have more than doubled since 2016. The auction house Sotheby’s found a classic 2.55 Chanel bag sold for around $1,650 in 2008. In 2023, that figure from Chanel is closer to $10,200. (If the cost had risen in line with inflation over the 15-year period, it would be expected to cost $2,359). This week, Pharrell Williams, the men’s creative director at Vuitton, unveiled the label’s new Millionaire Speedy Bag. The crocodile hide bag is made-to-order, costs a cool million and has a distinctly Scrooge McDuck aura.“Industrywide, the pricing has gotten truly absurd,” the influencer Bryan Yambao noted in an Instagram post this week when discussing a $6,000 woolen Miu Miu coat. “I do think this is a good time for most brands to lower their prices.”
In the past year there have been signs that so-called aspirational customers, who buy entry-level luxury products like cosmetics and spirits, have curbed their spending. Middle class professionals who once saved up for a luxury investment handbag or coat have been aggressively priced out.So who is spending $3,000 on a knit hat shaped like a duck from the British brand Burberry? What about $24,500 on a vicuña jacket by Brunello Cucinelli? Or $1,250 on a white cotton shirt by The Row?The answer is the 1 percent, obviously (or those willing to incur credit card debt). Luca Solca, an analyst for Bernstein, estimates that the top 5 percent of luxury clients now account for more than 40 percent of sales for most luxury goods brands. As wealth inequality increases globally, luxury brands are doubling down on an ever smaller slice of their clientele. Will this strategy work? Or is there a backlash brewing which might force the luxury pricing bubble to burst?
The below discussion among Style journalists has been edited and condensed.Elizabeth Paton To many people, luxury price tags have always been absurd and almost amoral. And prices in luxury fashion keep going up, and up, and up. Does it matter to customers?Vanessa Friedman The high prices of Phoebe Philo’s new line certainly struck a nerve, despite the fact they are actually at the lower end of the luxury market. It made me wonder why it was the Philo line that sparked such outrage.Stella Bugbee It’s rare to see a collection for the first time and be simultaneously confronted by the prices. We go to fashion shows and admire or critique them on a conceptual level, but often what we see on the runway doesn’t make it to the store. It was also more expensive than the old Celine.VF Although, almost everything “luxury” (including new Celine) is now more expensive than old Celine. Also, perhaps, because Phoebe has become such a mythic, fashion-savior-of-women, rightly or wrongly, and we were waiting for years for her line, a fantasy arose in which she also saved more women by making her clothes available to more people. For some of her fans these prices almost seem like a betrayal.