An informal survey of a group of New York women in their early to mid-30s regarding how much they’re willing to spend on luxury goods virtually yielded a single answer: the limit does not exist.
As oddly funny as the reply is, it’s certainly in line with what Vogue’s top editor, Anna Wintour, predicted back in April 2021. At the time, the fashion guru noted the arrival of a post-pandemic indulgence akin to what the United States experienced during the Roaring Twenties, specifically telling the Financial Times that “people have been locked up for a long time and they are going to go out and want to spend.”
“People have been locked up for a long time and they are going to go out and want to spend.” -Anna Wintour
The numbers paint a similar picture: according to Statista, revenue in the luxury goods market in 2022 currently amounts to over $69 billion and is expected to grow annually by 3.26% through 2027.
Chanel, one of the most sought-after high-fashion brands in the world, reported strong sales following the pandemic last year while the likes of J. Crew and Uniqlo released products at higher price points to capitalize on the luxury spending trend.
This past summer, highly recognizable fashion houses like Dior, Valentino, and Prada mounted pop-up shops across the United States to draw high-end shoppers in. Mission accomplished, clearly, as the trend seems to be continuing through this holiday season as well, according to CNBC.
How Much is Too Much?
If there is one obvious thing, shoppers’ devotion to expensive goods has not been affected by the current, unprecedented levels of inflation or, even, the actual price of products. But is there a tipping point? How much money is too much money for a Chanel bag? Are luxury fashion houses at risk of losing customers because of constantly, and significantly upping the cost of their offerings?
An average pair of Chanel flats currently cost upwards of $1,000, while a Hermès Birkin can famously run up to $30,000. Shoes and bags at Prada and Dior, which are by many considered to be slightly less expensive brands than the former two, won’t cost less than $900 to $1,000 either.
The pretty staggering prices should come as no surprise: luxurious goods are luxurious for a reason and should cost more than items sold at other outlets because, in addition to supposedly being crafted with more durable materials, they also indicate status, which to many is a currency more important than money.
That being said, there seems to be something about high-end goods that makes them even more special, quite literally shielding them from the negative global effects of inflation. As the price of goods has risen, people have been staying away from certain products—but luxury shopping is the one industry that seems to be immune to that shift.
Luxury Reaches New Heights
According to the latest Saks Luxury Pulse survey of buyers’ attitudes towards spending and fashion trends, “more higher income and younger consumers are spending on luxury.”
“When asked where they would spend an extra $500, respondents with an income of $200k or more would spend first on vacation and leisure travel (38%), followed by shoes, accessories and handbags (29%),” reads the study.
As for how much more than usual folks are willing to spend, it all seems to depend on the products that are available.
“My limit on how much to spend on something depends on the item,” a friend of mine said. “But that limit has gone up and I think that’s because the cost of goods for just about anything has increased.”
Interestingly enough, though, said friend, whose high-paying career allows her not to shy away from purchasing luxury goods pretty regularly, finds that the price increase connected to bags specifically has reached “a level of absurdity.”
“The large classic Chanel handbag that I purchased for $3,000 a decade ago now costs $10,000,” she said. “That’s insane.”
Said friend, however, also admitted to feeling comfortable about paying a premium on shoes because, percentage-wise, the price increase isn’t as staggering. Chanel espadrilles, for example, went from around $600 to $800, more or less—an average 30% increase versus an over 200% one.
What many people point to when revealing their willingness to “overspend” on hangs, shoes, and accessories is their proven ability to retain value. Used Chanel handbags and Gucci shoes, for example, can easily be re-sold at hefty prices on the secondary market, a fact that may easily convince on-the-fence shoppers of the worthiness of a potential investment (“I can make my cash back when I decide to sell it, anyway!”).
Standing Strong During Economic Decline
Paradoxically, that way of thinking contributes to brands’ ability to constantly up prices—which is exactly what’s happening every few seasons. But what makes the luxury goods industry so different from others?
Unlike, say, the real estate world, which depends on both prices set by homeowners and government-imposed interest rates that folks rely on to buy a property, most high-end fashion items are purchased in full with a buyer’s own money. Usually, once interest rates go up too much, the average price of a home decreases to account for the uptick—but that’s never really been the case within the luxury space. Unless folks stop buying bags, shoes, and the like, indirectly indicating to the fashion houses that, well, enough is enough.
Is that going to happen anytime soon? If history teaches a lesson, the answer is no. That probably has to do with fashion’s intrinsic ability to fascinate and interest buyers, a characteristic that no essay, financial model, or analysis can truly get to the bottom of. There is just something about being able to purchase a good, seeing in your space or on your body, that tickles all the senses, to matter the price tag. That sensation can be achieved with a $70 Zara dress, a $20 GAP pajama set, and the $1,200 Hermès
clogs that, after months of debating, I finally purchased. “You made it!” they seem to scream to me every time I open my shoe closet.
25 comments
The data visualization is flawed. It is year not month.
Yes, that should read year, but it wasn’t our chart. Let me see if we can still edit it!
Totally understand! I knew it was not your chart. I am a data nerd and bag lover! ❤️
I should just have our own chart made!
And Vlad is a data nerd too, so I love and appreciate that!
I’m actually astounded that high end shopping hasn’t slowed down, despite the increase in prices. How high must prices go before consumers say “no, thanks”. To see the dramatic increase in prices, for example with Chanel, is hard to stomach, especially when the product hasn’t changed. I am fortunate to have some expendable cash, but I’m also not a fool to throw away my money, and purchase bags, at these ridiculous price point increases.
But the product has changed… for the worse.
”Fashion is a form of self-expression and autonomy at a particular period and place and in a specific context, of clothing, footwear, lifestyle, accessories, makeup, hairstyle, and body posture” not AN INVESTMENT… Try to have some fun with fashion ladies! Try to dare because let’s face it – obsessing over a Chanel bag is neither fun nor daring… Explore new designers and designs and stop thinking fashion items as investment pieces.(credits Wikipedia)
I have a limit on how much I will spend. If I don’t get to have something because I have deemed it too expensive or not worth it, I’m good. I’m not going to lose sleep over it. At the end of the day, everything is not meant for everybody. Life is too short to anguish over the in affordability of material items.
Rich people stay rich even when the rest of us have to watch every penny to make it to the end of the month.
My family income is >$1M/year and I am done with these ridiculous prices. I refuse to spend my hard earned money recklessly. It’s not about being cheap, it’s about value and I don’t feel these prices are of value any longer. I hasten to guess more and more people of means will begin to slow down their spending as well.
We are also a family of two high earning professionals and while I like my bags, (and he likes his tech), I have recently become fed up with price rises. I have the means to afford a few Chanel’s every year but I won’t be doing it anymore. I have developed a recent love affair with Loewe, Celine and Chloe (although both have also raised prices significantly) and even brands like Khaite which is making wonderful suede bags for fall/winter. My husband recently purchased me an LV Coussin for Christmas which is also speedy buy I reasoned that when broken into the components of the two straps and bag it wasn’t terrible. Long story short, I think my limit is $5k and ideally lower.
I totally agree and my husband and I are in a similar financial situation. I actually bought my Coussin PM in 2021 when it first came out at 3,900 USD and now I wouldn’t even think of paying the 4700-5K
I was just at Loewe, well and all of Rodeo Drive, yesterday shopping and loved their bags. The colors are to die for. And the prices are still reasonable. Interestingly, not one store had a line out front. All stores including LV were walk right in. It was like shopping at the airport. I think things are already changing for luxury shopping. Also, Hermes stock was embarrassing. I bought nothing all day, but will probably go back for the Loewe Mini Puzzle. So cute!
I used to live in SoCal (10 years ago) and stores were always normal walk-in. I thought this “lining out” phenomenon in US is due to pandemic (sanitation and/or supply issue). No?
Chanel prices are coming down in the luxury resale market. I would love to see an article about this.
I do wonder if a shift to other brands would emerge. Say $3000 is a threshold on the spending pyramid (not about affordability but willingness), then this large group will shift that spending to brands/pieces in the Goldilock range yet much worthier of their price tags…maybe? Case in point, a decade ago, $3000 was well spent on a Chanel classic flap. Because it was fun and versatile (in my opinion). Now it would be silly to pick it up at $8800. But I see plenty other $3000ish-or-less options for a fun and versatile bag.
These ridiculous price increases … It almost makes it easier to justify for a “mere” $3000 purchase now.
10yrs ago my budget was $1000 (canvas bags)-$2000 (leather bags). Now ive doubled it to $4000 if its my dream chanel boy rainbow but it still not enough. For the past 3yrs ive been buying pre loved because thats all my budget can afford right now. It takes patience and a lot of waiting to find that perfect deal.
The discipline and the patience, good for you!
I started to participate the preloved market this year. There are things simply sitting idle with me. And I am good at keeping things neat. (So part of the burden to have and to hold, time to free up my energy) I see them going to someone else at a much better price point than brand new ones. I do believe they would spark joy for the new owners as our worldly possessions should do.
There is no financial gain, in my case anyway. But I really like to see some long-gone styles re-emerging and that is super cool. Feels like some fashion can have a chance escaping the fads and forming styles.
I have jumped in the pre-loved market myself and have purchased some really rare and incredible pieces. I’ll never own a Birkin ( if I was still in the workforce, absolutely) but as a woman of leisure, I’ll continue to purchase pre-loved bags/jewelry.
I bought a LV Capucines flower chain bag last year and although my investment accounts have tanked considerably, my handbag has increased in value! Go figure. The only thing I’ve made $$$ on 😂
Same with luxury brand shares, even more profitable over the last few years
The luxury market is geared toward the wealthy. Their spending habits have not changed so, I doubt that luxury prices will drop anytime soon.
The Chanel price increases over the last few years have been infuriating. I was comparing my flap from 12 years ago to one I bought 3 years ago and was distraught over the fact that the new one looks cheaply made and the clasp looks beat up – and I only use it for special occasions, while the old one has been abused and has traveled the world (still looks basically new).
I do not mind the price points offered by Gucci & Louis Vuitton bags, for example. There are still a variety of options available for different budgets. On the other hand, Prada’s nylon bags are priced unfairly in my opinion – I love them, but I’d rather adjust my budget in order to purchase a leather piece.
Won’t get into shoes, but I miss the days when Chanel ballet flats were under $600. I even remember scoring a pair for under $500 via Duty Free (London).
In conclusion, I do feel that other (newer) designers should be explored. They are offering a more unique product, the quality is wonderful (they still care), the prices are reasonable, and they will help you to stand out amongst a sea of common accessories. Last weekend I wore a Medea bag one day, a Chanel the next, and a Chloe. I got more compliments on the Medea versus the other, more common/well-known designs. Anyways, life is too short to dress and accessorize in a boring manner, so get out there and explore all the world of luxury fashion has to offer – no need to stick to a box of familiarity.
I would spend like before if only prices had increased.What bothers me is the absurd treatment in the boutiques. I tried to get an appointment in Paris at Hermes, failed, spoke to the manager and earned horrible fake news and trash behavior. I returned the items I bought days before ( yes, they HATE that ) and quit Hermes for now and a long time if not forever… I am buying second hand only now and will not lose my dignity no more.