In a bid to regain their exclusivity and tackle rising production costs, fashion houses are hiking up their prices. Let’s break down the main reasons behind this.
Luxury Brands Have A Particular Target Audience
Luxury brands were created with the most affluent individuals in mind. Over time, however, many have become more affordable to people outside of this bracket. This is thanks to discount shops selling their items and re-selling on sites and apps such as eBay and Gumtree.
In a bid from brands to widen the gap again, they are putting their prices up in order to only target their original market.
Brands that have made the move to increase prices and do away with markdowns over the past couple of years include Michael Kors, Burberry, and Prada.
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Rising Costs Of Production And Inflation
There is also an argument that the cost of production has spiked in designer items, and this is reflected in the price tag. Factors including sourcing materials and shipping have all impacted the prices being charged by luxury retailers to their customers.
Along with other luxury brands, Louis Vuitton announced their intention to up prices earlier this year, expressing that this was to account for changes in production costs, raw materials, transportation, and inflation.
Luxury Customers Are Still Prepared To Keep Spending
Another reason is that while the average member of the public will feel the squeeze of the cost-of-living situation, those with a little more to spend still seem to be willing to splash out on luxury items.
Brands know they can keep putting the prices up as they will always have a percentage of the population that can afford their goods.
In 2021, the luxury fashion market bounced back from the pandemic considerably, with market revenue in the UK surpassing that of pre-pandemic levels in 2019. As data from Statista shows, revenue is projected to grow steadily in the years leading up to 2025, particularly for prestige cosmetics and fragrances as well as for luxury leather goods.
Though the cost of living is increasing and price hikes for non-essential luxury items might seem counter-intuitive, the brands seem to be in a strong position to do this. Higher prices are a way for brands to maintain exclusivity. And with their revenue projected to increase over the next few years regardless, this is something they can afford to do.