It’s normal, even expected, for luxury brands to increase their prices. Between 2019 and 2022, luxury prices increased by as much as 25%, according to data from Edited, far outstripping the pace of inflation. Luxury brands increasingly relied on their most affluent customers who showed no signs of slowing down their spending.
But now, the slowdown has finally come to luxury. Luxury sales were down 14% across the board in October and down another 15% in November of this year. Multiple major luxury retailers are struggling, too, including Saks Fifth Avenue, which failed to pay its vendors for months earlier this year, and online retailers like Farfetch and Matches, both of which were sold for pennies on the dollar this month after periods of declining sales. So with spending curbed among aspirational consumers, will 2024 see luxury brands finally slowing the pace of their discounts?
Sarah Davis, founder of the luxury resale company Fashionphile, believes it’s unlikely that luxury brands will lower their prices from the current high. Unlike companies like JCPenney, which has marketed pre-inflation prices as a selling point, luxury brands aren’t likely to take the hit to their reputation by moving to less shocking price tags.
“There has never been a time since the luxury brands have been producing leather goods that prices have not gone up,” Davis said. “Over the past 20 years, they’ve gone up at least once a year, almost every year, even during the early Covid era.”
But Davis did say she expects, at the very least, that brands will be more conscious about how frequently they bump up prices.
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“In the past couple years, we have seen a significant uptick in the frequency of those price increases,” she said. “I do believe that cadence will slow as interest rates come back down. There is always a customer at the highest end of the market, and the luxury brands continue to backfill the lower segment of the market with additional options at more accessible price points.”
Others that Glossy spoke to on the topic agreed that luxury prices will likely continue to grow, based on trends in the market. Data from Sotheby’s shows a continued hunger for ultra-expensive goods, with the auction house expecting 2023 to be a record-setting year for prices in luxury handbags. The price of luxury items purchased at Sotheby’s by people under the age of 21 has quadrupled in the last year, for example. And Chanel saw its revenue continue to grow throughout 2023, even with aggressive cost increases that outstripped the rest of the luxury industry.
“As global inflation continues to decrease, we’d expect luxury brands to continue with their price hikes,” said Sam Atkinson, co-founder of the e-commerce company Swap, which works with high-end fashion brands like Percival. “Consumer and market optimism has had a holiday rally this year that will better poise luxury brands to increase as they see fit.”
