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.
A perfume, a new pair of sunglasses, a belt, a bag charm: these so-called “small luxuries” have swelled in importance to the luxury industry in the past year. The reason? They’re selling.
Bigger purchases like handbags and heels have become more expensive across brands, pushing aspirational customers to pick up less pricey accessories or beauty items. According to a Vogue Business survey of nearly 1,000 Vogue and GQ readers, 72 per cent said their spending on affordable luxury items either stayed stable or increased in the past year.
“A relatively low and absolute price point is important to support demand,” says Bernstein’s luxury goods consultant Luca Solca. “While prices of mainstream luxury products like handbags have risen, categories like charms, costume jewellery, beauty and sunglasses have become even more crucial to keep clients in the brand’s audience.” Simar Deol, senior foresight analyst at trend consultancy The Future Laboratory, agrees. “Companies are embracing this strategy to mitigate economic challenges,” he says.
It’s a boom for brands during an otherwise tricky time, and they’ve leaned in. Chanel, Dolce Gabbana and Dior launched bedazzled miniatures in the form of bag charms to build brand awareness amongst younger consumers. Carolina Herrera, Chanel, Tory Burch and Erdem branched out with brooches on their SS24 and AW24 runways. Sunglasses have been a major hit: Saint Laurent spiked, according to The Lyst Index, thanks to a collaboration with Ray-Ban. Christopher Esber, Ami Paris and Namacheko all launched sunglasses lines. Accessible jewellery was also a bright spot, as management consultant firm Bain Company reported the category as a top performer in the current landscape, with recent entrants from Toteme and Self-Portrait.
This year, fragrances offered an alternative to the lipstick effect. “If bag charms have become affordable luxury purchases, so has luxury perfume,” says Michael Appler, director at analytics platform Trendalytics. Beauty conglomerate Coty launched a new premium fragrance collection, while Bottega Veneta, Balmain, Valentino, Fendi, Acne Studios and Cult Gaia introduced fragrances for the first time. Chopova Lowena and Jil Sander’s are launching in January.
“Fragrances allow luxury brands to offer a product that is aspirational and accessible, making it easier to maintain consumer engagement during a slowdown,” says Jean Madar, CEO and chairman of fragrance and cosmetics manufacturer InterParfums, which launched Roberto Cavalli and Lacoste fragrances at the start of the year. Madar predicts that both combined will surpass annual sales of $100 million by the end of 2024.
These items and their more palatable price points have proven they can attract aspirational customers — who are crucial to luxury’s growth but have been boxed out by sticker shock. Introducing things like fragrances and bag charms is also an expert-approved strategy for brands that raised prices to win back this demographic. But leaning too heavily on little luxuries raises questions: will the bottom fall out?
Affordable luxuries come with strings
Analysts’ views are mixed. “These accessible categories help brands engage with aspirational consumers, offering a way to maintain their connection to luxury. However, this approach — though beneficial for short-term revenue — is often a tactical move rather than a strategic one,” says Filippo Bianchi, managing director at Boston Consulting Group.
For Bianchi, brands that use small luxuries to sustain sales rather than reinforce brand desirability risk losing customers in the long run. Why? Luxury consumers want to feel special. “Having the product is one thing, but communication and the customer experience is another,” says Bain Company’s lead luxury author, Claudia D’Arpizio. “The customers who purchase a small piece of luxury, like lipstick, need to feel special, whether online or in-store. They don’t want to feel like a second-tier citizen.”
For D’Arpizio, customer experience is the other half of the affordable value proposition, and brands must be consistent. She says it’s why Hermès does well: regardless of whether a customer is purchasing a beauty product or a Kelly bag, they receive an ultra-coveted, one-on-one experience, leaving stores with the signature orange packaging, reinforcing desirability.
Brands must also be prepared for what an influx in product volume will bring to the bottom line.
“There’s profit in small luxuries, namely because they don’t cost huge amounts to make, but brands will need to sell a lot to match a $10,000 bag,” says Fflur Roberts, Euromonitor International’s head of luxury goods. For example, Burberry would need roughly 10 customers to purchase its Thomas Bear charm (£280) to equate to one customer purchasing its Gabardine trench (£2,090), meaning brands will also need to rebalance costs and strategy across the board.
How much brands can benefit from the small luxury boost also depends on how successfully they bring new customers into the fold. For Roberts, a broader customer base is advantageous for brands in tough times, but if they fail to engage and convert new customers, they’ll alienate their long-term loyalty and high-spend potential further down the line.
Conversion is currency
So how can brands foster an entry-level customer into a loyal one when prices of core items remain high? Beyond the elevated shopping experience, experts say brands can lean into exclusivity. “Carve out collections that are more exclusive, available in certain stores or launched in certain markets,” says Roberts. Exclusivity and quality can sustain customers (and the bottom line) in the long run as brands navigate beyond the slowdown.
Bianchi agrees. He believes a rare product offering, whether a small or large ticket item, is the thread that ties customer tiers together and keeps them coming back. “Affluent consumers continue to drive demand for exclusivity, hyper-personalisation and innovation — they seek exclusivity and novelty, adding niche or artisanal items like a limited-edition bag charm or ultra-expensive perfume to their collections, reflecting their desire for unique, meaningful luxury. While more affected by economics, the aspirational consumer still desires a ‘touchpoint’ with luxury and likes limited offerings to feel special.”
Otherwise, if brands introduce accessible luxuries like beauty or other adjacent lines into the portfolio, making sure it becomes a worthwhile category mix alongside core items will be key. It worked for Victoria Beckham, which was on track to exceed $100 million in sales in 2023 thanks to its beauty debut and expansion. Beforehand, the company was reported to have lost £5.42 million in 2021 and £7.49 million in 2020, per filings on Companies House, but hit profitability in 2022 with revenues of £58 million.
“The brand started with dresses, and for most people, it was out of their budget. Since she launched more affordable leather goods and ultimately her colour cosmetics and fragrances that are exclusive in size and high quality, it’s been hugely successful for the brand’s bottom line,” says Roberts. New York-based speciality retailer Hirshleifers invested in a partnership with specialist beauty retailer Violet Grey to increase its category mix beyond the 2024 small luxury demand. “Customers are responding to beauty and treating themselves without spending huge sums of money. For us, it’s also an opportunity to expand our small luxury offering,” says co-owner and buyer Lori Hirshleifer.
But going forward, experts advise caution with little luxuries.“While the category can often deliver high unit economic margins, they’ll unlikely sustain a luxury brand’s bottom line on their own,” says Guia Ricci, BCG’s managing director. D’Arpizio agrees and recommends that brands “work on core business conversion, stop increasing their prices and rebalance” to see greater success.
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