This article is part of The Luxury Slowdown Survival Guide, a collection of articles that examines the recent industry downturn and the strategies brands may employ to come out of it unscathed.
Ten years ago, a Chanel medium Classic Flap bag cost $4,900. In 2019, it cost $5,800. Now, it’ll set you back $10,200.
It’s not just Chanel. Luxury prices have risen steeply over the past few years across megabrands, with the average US price of global luxury goods up 61 per cent versus 2019, according to retail intelligence firm EDITED. Now, you’d be hard-pressed to find an entry-level luxury bag — the pieces prime for aspirational shoppers — for under $3,000.
Price increases have been part of brands’ strategies for years, but 2024 marked an inflection point, with experts attributing the luxury slowdown to, in part, “greedflation”. Grievances have bubbled to the surface as consumers and industry insiders alike speak out about the atrocity of luxury pricing relative to its offering — especially in comparison with pre-pandemic price points.
Seventy-seven per cent of consumers agree that luxury fashion items cost more than they did a year ago, per Vogue Business’s exclusive survey of almost 1,000 Vogue and GQ readers. It’s impacted spending, with 37 per cent of respondents agreeing they shop less for luxury than they did a year prior.
In October, Frédéric Grangié, president of Chanel’s watches and fine jewellery division, told Swiss newspaper Le Temps that consumer fatigue is the reason the luxury slowdown will persist. “One could call it the trivialisation of luxury; I call it ‘luxury fatigue’,” he said. “Customers are tired of being bludgeoned by luxury.” The next month, Gucci’s former CEO Marco Bizzarri said that the industry’s problem “[is] a supply-side issue more than a demand one, in the sense that the offering by luxury labels is so flat that people are reluctant to buy, also because of the price increases”.
Aspirational consumers — a group that major luxury brands had successfully brought into the fold, experts say — are now being priced out.
Eugene Rabkin, founder and editor-in-chief of StyleZeitgeist, recalls a pair of Bottega Veneta Lug Chelsea boots he purchased back in 2022 for $950. “It’s now $1,400 for the exact same boot,” he says. “You cannot tell me as a brand that your costs went up in a couple of years by 50 per cent.”
It’s a trend especially off-putting to new and younger consumers, whom luxury brands covet. Luxury prices have always been set to maintain a level of exclusivity. But now, it’s reached a price point that most can’t even aspire to. This disjuncture also risks alienating even wealthy consumers, if prices feel illogical.
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“A lot of the luxury industry is built on people convincing themselves to spend a little more for some type of perceived value. But at the point where your price outruns the perceived value that you’ve created as a brand, you end up with customers who just turn away,” says Amanda Mull, senior reporter at Bloomberg Businessweek, who has tracked luxury pricing since her 10-year stint at PurseBlog.
Consumers are now consistently waiting for sales, turning to resale, or bowing out entirely. Luxury revenues are taking a hit — which bodes especially badly for companies that rely on year-on-year growth by the quarter. But it’s not so simple as lowering prices. How can brands course correct?
What happened?
Since the supply shocks of the pandemic, prices have been rising in the West. In the fashion industry, increases have been steeper than most, in a response from brands to a class of high-disposable income consumers — aka high demand; limited supply. Unable to spend money on pricey meals and vacations while in lockdown, peoples’ incomes were piling up. In this Covid-fuelled revenge spending era, the consumer was happy to absorb the extra, says Bernstein analyst Aneesha Sherman.
But brands took this as carte blanche to raise prices until they received pushback. Last year, objections ensued. Consumers were done with revenge spending, and were instead feeling the impact of inflation, interest rates, creeping credit card debts and concerns about the incoming Trump administration. “That whole wave of pent-up demand had already played out,” Sherman says. “So there wasn’t any reason to go on a huge shopping spree, especially with inflation and student debt and credit card debt and so on piling up.” All of this drove consumers to question why they’re being charged $3,000 for a bag they would’ve paid $1,500-odd for pre-pandemic.
Fashion’s extra-high prices are driving consumers to category-switch, experts say, seeking luxury in travel, entertainment and restaurants. “If it’s a difference between paying $500 for a Taylor Swift ticket and $500 for a cotton T-shirt with a logo on it, I am not surprised that many people would opt for the concert,” Rabkin says. By 2027, it is projected that the number of consumers making luxury bag purchases will decrease by 13.7 per cent (from 68.1 to 54.4 per cent of consumers) and designer clothing by 11.2 per cent (from 62.4 to 51.1 per cent of consumers), according to a recent white paper by creative agency The Independents. Whereas art and photography, luxury vintage, holidays and hotels, and fine dining are all expected to see growth.
“The cost of living crisis has recalibrated how we think about value. A luxury handbag is no longer competing with other handbags — it’s competing with experiences, investments and even security,” says consumer specialist Kate Hardcastle. “Consumers are asking: do I need this, or would I rather have a weekend in Sicily, a deposit on a home, or simply some breathing room in my finances? Luxury has always risen and fallen with the times, but this moment feels different. It’s not just a slowdown — it’s a recalibration of what we value. It’s not just about price — it’s about purpose.”
A luxury purchase, after all, is about the experience — the feeling when you buy it and when you wear it. “You could go on a trip for $3,000 and remember it or you could buy a bag,” luxury analyst Robert Burke says. If you opt for the trip, chances are you can still get the bag pre-owned for under a grand on resale a year later.
It’s manifesting in consumer behaviour. Of the Vogue Business survey respondents who said they have reduced their luxury spend, 41 per cent had done so to spend on other things (like holidays). Forty-one per cent also said they feel luxury items no longer offer good value or justify their price.
Consumers today are also smarter; social media is, in part, to thank. Across TikTok and Instagram, users post videos dissecting the gap between quality and price (Tanner Leatherstein, for instance, deconstructs luxury products to assess quality), tracking price increases and comparing luxury to ‘regular’ products.
Because consumers have access to more information and context, they no longer feel embarrassed to say that a luxury item is too expensive for them to afford. “There’s [been] a fundamental psychological change where people are completely comfortable in questioning the price and even challenging the price,” Burke says. “No brand ever expected that.”
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Similarly, buying things secondhand is now seen as a savvy way to shop rather than a next-best-thing option. The resale market is more stabilised and professional than it was even five years ago (pre-pandemic), says Burke. Reduced uncertainty — and stigmatisation — around secondhand luxury goods means more consumers are turning to resale for better deals and, some say, quality.
It’s catching on across the high spenders, too. Burke recalls a recent trip to Worth Avenue, Palm Beach’s luxury precinct, during which he stopped by The RealReal, filled with racks of secondhand Chanel, Thom Browne and Loro Piana. “I would think the Palm Beach consumer would be the last one to buy resale,” he says. “But it was one of the busiest stores on the street.”
What can brands do?
Brands can’t simply lower prices.
These brands aim to cultivate a perception of luxury that implies luxury goods are not mass-market goods; and thus do not conform to the same laws of price elasticity as general goods, Rabkin says. If brands lower prices, they’re suggesting that luxury goods are just that.
“That entire narrative of craftsmanship and heritage, all this mythology that has been built around luxury product, all of a sudden, that’s up for questioning and discussion,” he says. “And that’s not a good look.”
Brands have backed themselves into a corner, because they haven’t built themselves any way to recapture the consumers they’ve lost, says Mull.
Expert consensus is that brands need to introduce new products, at a lower price point. This avoids the “unflattering comparison” of prices lowering across seasons or years, and loyal consumers who just purchased products won’t feel ripped off, she continues. This is a key point of consideration among a consumer group prone to switching between brands — or to other luxury experiences entirely.
Burke points to Louis Vuitton, whose passport holders retail for $370 and cosmetics bags for $690. “They’re very conscious of merchandising,” he says, which creates access points for aspirational consumers that are now priced out of the majority of luxury labels.
Materials are another gateway to lower price points, such as a canvas/leather mix, Burke offers. He points to Loewe as a blueprint, whose straw basket bag retails for $690. “You’re going to be forced to look outside of just Italian calf skin,” he says.
Take Prada too, whose Re-Nylon line of more affordably priced nylon bags has proven successful. The brand is cognisant of the need for a mix. Group CEO Andrea Guerra said in Prada’s October earnings call that the brand is “stretching” pricing to generate a “price-mix effect”. Through this, he believes that Prada can increase some of its price tags while maintaining that entry point. “We are well positioned on entry prices, but we also [have the substantial territory] to extend the price range upwards,” he said.
Burberry has also shifted its pricing architecture back to where it was two years ago, elevating the prices in categories like outerwear, where it has authority, and reducing prices in categories like leather goods. In his strategy update in November, new CEO Joshua Schulman was transparent that Burberry’s elevation strategy “didn’t work”, as reflected in sales figures. (Leather goods and shoes underperformed in the first half of 2024, while outerwear and soft goods outperformed.) “We took pricing too high across the board, particularly on leather goods,” he said. “Going forward, we will restore a good, better, best-price architecture in a luxury context across categories. Importantly, we will align our price architecture with our category authority.”
Miu Miu is also reaping the benefits of lower ticket items. The brand’s 2024 investment in bag charms reduced its entry-level price point in accessories in the UK by £400 year-on-year, according to EDITED. “The brand’s success indicates the importance of a broad pricing architecture and signalling to consumers evolving tastes through personalisation,” says EDITED senior analyst Kayla Marci.
Consumers are keen on this approach. When asked what luxury brands could do better to appeal to consumers, one Vogue Business survey respondent said: “Entry-price options, but not necessarily decreasing the prices of their goods. If they had, say, a few entry-level items, it would be a good introduction to the brand, further marketing and augmenting their standard seasonal lines.”
Experts say one way to create pricing segmentation is to match the product to the price — rather than having five handbags at different prices, handbags should remain about the same but small leather goods, for instance, would be at an entry-level price. “The way to do it is to stay loyal to your brand DNA,” says Dafna Goor, assistant professor of marketing at London Business School. “You can’t sell something that is not priced according to your core segments, but you can create products that are accessible because they are entry level.” Creating a line that is more affordable for a clearer reason — like activewear or sportswear, for instance — could help brands manage the post-elevation era, adds McKinsey partner Joëlle Grunberg.
Despite this logic, experts agree that introducing lower ticket items doesn’t mean brands have license to keep hiking up their hero products. Instead, they say price increases need to be put on pause. And if Trump’s tariffs are put into place, luxury brands need to be wary of hiking prices in response, experts say. “If they’re smart, they’re going to have to eat that premium and take a lower profit margin,” Rabkin says. Burke agrees: “There has to be some sensitivity to the consumer.”
Get creative
Customers will see through cash-grab attempts to win them back.
“I always bring it back to creativity and merchandising,” says Burke. He says brands need to bring back short runs and limited-edition attainable offerings — items that the luxury consumer will buy, as well as the opening-price consumer
Hermès — the gold standard for high price points — offers a framework for (more) accessible items, Burke says, pointing to its small gift items or small leather goods accessories for $300 to $700 that are there if you hunt them. He recalls a neoprene pouch he gifted a friend who surfs for about $400. “You walk out feeling though you’ve really bought something of value from a creative standpoint.”
Consumers want newness, Mull says. Much discretionary spending isn’t driven by “I want a handbag” — it’s “I want a treat”, she explains. It’s a different impulse; one that concert tickets, a trip, or a bag can cater to. If shoppers are met with the same bag, same look, same story for three years in a row, and there are new, fresh places on their travel bucket lists, they’re likely to category switch.
“In an industry where there aren’t a tonne of new ideas out there in a lot of brands, having a distinctive, interesting idea is something that distinguishes a Prada, a Miu Miu, a Bottega Veneta,” says Mull. “When you think of those brands, you can think of the very stylish, very interesting woman who’s wearing them. And there are a lot of other brands that the image doesn’t conjure quite so quickly or clearly.”
To keep consumers on board — and to entice new ones — luxury incumbents need to shift gears. And fast. This year will be a make or break in product mix and pricing. “You’re going to see who can get creative and who can merchandise,” Burke says. And, he adds, it’s a reckoning that’s a long time coming. “It’s a good correction that needs to happen.”
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