Brands like Chanel increase their prices annually—a New York Times article cites that the price of a Chanel 2.55 was “US$1,650 in 2008. In 2023, that figure from Chanel is closer to US$10,200”.

According to the data company Edited, luxury prices have increased by 25 per cent since 2019. Even influencers like Bryan Yambao, known as Bryanboy, complained about the prices on Instagram last year, saying: “Industrywide, the pricing has gotten truly absurd.”

Nobody has paid heed. A report by research company Bernstein states that the prices of evergreen products from Dior and Chanel increased by 66 per cent between 2020 and 2023. Burberry has seen its fortunes fall since it hiked its prices, with knitted duck hats going for US$3,000.

While some brands claim to be targeting the ultra-wealthy, this strategy risks alienating a significant portion of their customer base who are now questioning the value proposition. This can be seen in the contrasting fortunes of Prada and Miu Miu, who have maintained or even lowered prices on some of their collections, successfully attracting younger consumers.

It’s difficult to ignore that we are living in a period of global economic uncertainty, with many facing job losses and financial strain. It’s no surprise that these price increases have been termed “greedflation”, leaving a bitter taste for some consumers. This raises questions about whether luxury brands are prioritising profit margins over genuine value and craftsmanship, potentially alienating consumers who expect more for their investment.

In an interview with Bloomberg, Balossini Volpe, a professor at Italy’s ISTUD business school, explained, “When customers realise that the same bag doubled in price in less than five years with no explanation but greed, and at the same time, they hear about subcontractors using underpaid illegal workers, they feel angry and fooled. Their sense of trust is broken.”

Brands need to carefully consider whether their price increases are justified by genuine improvements in quality, craftsmanship or exclusivity. Simply raising prices without offering a commensurate increase in value can erode consumer trust and drive them towards more affordable alternatives or the resale and vintage market.

Savvy consumers are increasingly turning to these platforms to find unique, high-quality pieces at more affordable prices. This trend reflects a shift towards more conscious consumption and a desire for individuality, potentially impacting the sales of new luxury goods. 

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While the slowing Chinese economy, inflation and the white-collar job recession have undoubtedly contributed to the luxury slowdown, it would be short-sighted to ignore the role of internal strategy in the struggles of some brands. A closer look reveals several missteps that may be exacerbating the impact of external market forces. 

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The luxury industry thrives on innovation, but some recent product launches have been met with criticism for lacking originality or failing to capture the imagination of consumers. The Louis Vuitton Neverfull Inside Out bag, for example, was perceived as an attempt to capitalise on a trend that savvy consumers were already embracing. This raises questions about whether some brands are investing enough in genuine innovation or simply relying on old formulas and rehashed ideas.

Moreover, some brands seem to be struggling to adapt their messaging to resonate with these diverse audiences. Gucci’s recent change in creative direction, for instance, has been met with mixed reactions, when Sabato de Sarno was named creative director, replacing Alessandro Michele. While some applaud the shift towards a more understated aesthetic, others feel the brand has lost its distinctive identity and alienated its loyal customer base. 

The luxury industry has long been known to weather economic downturns. During the recession of 2008, the luxury good market declined by 8 per cent, with LVMH weathering 1 per cent of that impact. However, its fashion and leather goods markets actually grew 5 per cent, proving a long-standing belief that luxury has inelastic demand, and is thus not affected by economic conditions.

But with recent numbers, we have to ask: Is this just a blip? Is this just the market correcting itself after the post-pandemic boom? Or does it signal that luxury needs to reinvent itself by re-evaluating pricing strategies, investing in genuine innovation and strengthening its commitment to sustainability?

Perhaps it’s time for the industry to redefine its raison-d’être for a new generation of consumers seeking more than just status and exclusivity.

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