Report

Will Luxury Brands Ever Lower Their Prices?

If you’re going to buy a bag, you might as well do so now: prices aren’t dropping any time soon

In 2016, a medium Chanel Classic Flap bag sold for about $4,900. Fast-forward to today, less than a decade later, and the product has more than doubled in price: it’ll cost you around $10,200 to purchase the classic model right now.

Although brands like Chanel and Hermès have led the charge in terms of price hikes in the last few years, the trend has affected labels across the board and, upon closer inspection, is dependent upon a variety of factors, including inflation, cost of materials, diminished supply and greater demand.

The pretty staggering figures shed light on a few key questions: do luxury brands intend to halt price hikes any time soon? When will customers think “enough is enough” and stop buying products in reaction to the exorbitant costs?

Will Customers Ever Boycott the Hefty Price Increase of Luxury Goods?

“I will never buy a first-hand Chanel handbag ever again, I will only buy it second hand,” my friend Rachel, who owns three Chanel bags, tells me when asked about her purchasing habits. “Chanel has raised prices too high, no sensible person can buy their goods. The brand has lost its mind trying to compete with Hermès.”

As sensible as Rachel’s thought process is, statistics and trends seem to disagree with her.

In fact, since the start of the pandemic, Chanel has increased prices four times—and consumers have not stopped buying.

“Chanel handbags are highly sought-after, iconic statement pieces, and demand is always higher than supply,” reads an article published on Sotheby’s back in March. “Thus, Chanel continues to boost the prices of their most coveted offerings, and consumers will continue to pay.”

But is there a limit? Will die-hard fashionistas eventually stop investing in luxury goods despite their value, just like Rachel claims she will?

“Most recently, loyal customers have been complaining about the rising prices of Hermès goods,” reveals Carmen Lopez, the retail business expert and founder of Current Boutique, a national designer and vintage second-hand business. “They are frustrated and complain but I don’t see them turn their back on the brand and they continue to purchase. In fact, I think price increases push people to sell more of their designer bags in the second market so that they can get their money back and buy the new style.”

Chanel Price Increase
A Shopper at Miami’s Design District With a Chanel Flap

Designer Price Increases Happened Across the Board Last Year

It’s not just Chanel, of course. In late 2022, Gucci raised the price of some of its handbags by up to 9% worldwide, Celine opted for a 4-8% hike, the average Louis Vuitton handbag went up by 10% and most Prada products now cost 3-8% more than they did last year.

Interestingly enough, some other companies have been using cost-cutting measures on certain goods as preemptive hikes on others.

Take Tesla, for example, which is arguably, the most universally recognized electric car brand in the world. Although not part of the fashion industry, the cars sold by Tesla have been associated with luxurious living, with costs continually rising until recently, when the brand announced cuts across most models.

Although, at first glance, the new prices might seem to be a way to appease customers, a deeper look at the company’s decision makes it pretty clear that the cuts will allow Tesla to eventually sell their newer cars at an even higher price point.

In fact, the company is currently trying to get rid of its inventory while remodeling. Additionally, when the market for cars slowed down, Tesla never reduced production—leaving them with a lot of surplus inventory. By lowering the price of its currently sold cars, the company will be able to sell the newer models for more.

That is all to say: even brands that are slashing prices are doing so with the intention of announcing the exact opposite in the near future.

Conversations about customer fatigue connected with price lists invariably lead to talks about the second-hand market.

Although the latter industry certainly fluctuates alongside the primary market, Iso Neville, a social media manager who regularly buys second-hand products, explains that “the prices do increase in the reselling world but not to the same extent they do when looking at new products.”

“I think that’s because there is still a stigma around second-hand and often people are selling their stuff not to make a profit but to just get rid of it,” she notes. That being said, given that new bags are so expensive these days, more people are paying attention to the vintage market, where they are more likely to be able to afford their dream clutch.

Louis Vuitton Monogram Bags
Prices continued to increase across the board last year, including Louis Vuitton
“Second-hand products have increased in popularity in many countries,” says Neville. “There are more buyers now, and there is more demand, so the sellers may start raising their prices.” Neville candidly admits that the potential trend will not necessarily affect her buying habits.

“It depends on the item itself, but when it comes to second-hand, I’m only buying something that has massive resale value in the future,” she shares. “I see all my purchases contributing to a circular economy as if I’m renting. So if I can make a profit on an item after I bought it and used it, then I don’t have a limit and won’t be priced out.”

In a way, then, the price hikes that have come to define the luxury market in recent years have one true direct potential result: increased interest in the second-hand world, rendering the industry more popular than ever before.

The Aspirational Effect

There is another important aspect of the story, though: aspiration.

“Like within every industry, inflation, increased labor, and material costs, price of operating a brick-and-mortar store and having a warehouse are reasons behind the price increase but, to a large extent, especially when looking at the likes of Louis Vuitton and Chanel, I think it’s also a strategic ploy to make the bags less accessible and more exclusive because that’s going to turn them into aspirational, exclusive, status symbol pieces,” posits Lopez. “It is no secret that luxury handbags are a reflection of success and class status, so I think that, at least with those two brands in specific, it’s a bit of a strategy.”

Alas, that might actually be the thesis worth focusing on: despite all the high-brow talk and focus on non-materialistic gadgets, we all want to look good and project a certain image to the outside world that is, whether unfortunately or not is to be determined, a reflection of who we think we are or, at least, who we would want to be. If paying 8% more on a Louis Vuitton tote will make us feel better about ourselves, should we even be thinking about that price hike? The emotional value of being the owner of the bag will, in some way, completely erase its higher ticket price.

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Isabella
Isabella
1 year ago

Tesla cut prices because they are fast losing their quasi monopoly on electric cars with virtually all brands releasing contenders at all price points.

Personally, I would never buy a Tesla anyways because of the despicable personality who heads to the brand.

AnOliveFollowedMeHome
AnOliveFollowedMeHome
1 year ago
Reply to  Isabella

This is a LUXURY platform not a POLITICAL one, lead your blind virtue signaling high horse to another pasture!

queer&brown
queer&brown
1 year ago

Some of us don’t have the luxury to ignore the political dimension of this post and life in general. Ourselves or our loved ones have been put at risk deliberately by Mr. Musk’s policies. Those who know, know.

Gloria
Gloria
11 months ago
Reply to  queer&brown

Pray tell, HOW have Mr. Musk’s policies directly affected your life?

Gina
Gina
1 year ago
Reply to  Isabella

I love how when Elon Musk came out with Tesla he was considered amazing, but because he allows free speech on a platform that should have free speech he’s considered despicable. He is doing more than anyone here will ever do. He is doing amazing things for space exploration, the environment, innovation. Last time I checked everyone here just buys handbags.

Isabella
Isabella
1 year ago
Reply to  Gina

1) Elon Musk was born into an extremely wealthy family—he didn’t have to work hard to get where he is today.
2) Elon Musk did not create Tesla. He became an investor with his daddy’s money and then took over.
3) Space X is currently facing a number of lawsuit for the devastating environmental impact of its launches.
4) If you think hate speech is awesome, that’s your prerogative.

Instead of glorifying this person, you should do a little research.

Gina
Gina
1 year ago
Reply to  Isabella

So I guess being born into a wealthy family he could have also chosen to do nothing.

Here’s the deal if you don’t want to buy a Tesla because you don’t like the person, then do that in all areas of your life. Half of the food in your refrigerator is connected to people that gave money to Trump’s campaign, but you’re still buying it aren’t you.

If you’re going to be holier than thou and put your money where your mouth is then you should really be doing that in all areas of your life. Handbags and fashion include, otherwise you just like to talk the talk.

Isabella
Isabella
1 year ago
Reply to  Gina

You don’t know anything about me but somehow you feel entitled to give me advice. That’s cute. Not sure why you feel so deeply devoted to Musk, but to each their own. Best of luck to you.

Tony
Tony
1 year ago
Reply to  Isabella

Thank you for saying everything I wanted to say. Allowing hate speech and all that crap that comes along with it is not admirable. Musk went from being an innovative and interesting personality to being a controversial bro who has aligned himself with some very questionable people and viewpoints.

BarbieDollPink💕
BarbieDollPink💕
1 year ago

“Demand is always higher than supply” for Chanel bags? Where? I live in a major City and when I go into my boutique the same bags are on the shelves, typically the flaps and boy bags. It’s almost a cliche when people say they’re “tired of the price increases, poor quality, etc.” Chanel flaps have priced themselves on the same par as an Hermes Birkin? That’s ridiculous! I’m not buying into the reasons that Chanel raised their prices. In 2022, their reported profits were $17.22 Billion!

pinksky777
pinksky777
1 year ago

Well considering most people are dumb as a box of rocks and continue to spend money that they don’t even have, amassing a huge amount of debt just to try and be “seen”… yeah I don’t think the price hikes are going away anytime soon. What they don’t get is that it’s way cooler to have a bunch of money in your bank account than to have all that same money hanging your closet. There’s something to be said about being mindful of what you buy, no matter your income, and creating a small timeless curated collection over time that has zero to do with trends, but more so pieces that fit your lifestyle and YOU love and are of quality. Thank social media and all the sheep who buy into that keeping up with the joneses lifestyle.

Terri
Terri
1 year ago

This is why I prefer indie brands and custom-made ones. Superb craftsmanship and for an iota compared to big brands. And I get exactly what I want too.

Ali A
Ali A
1 year ago

Designer is dead to me. When YSL increased like 30-40% for the same good last year, I wash shocked. Little of the increase is due to inflation, labor, etc. We know their employees aren’t getting fat raises and with their suppliers, they aren’t going to pay a substantial increase year over year. Average inflation has been incredibly high, but luxury brands are just riding that wave as an excuse for staggering price hikes. It’s greedflation and catering to share holders.

I took myself out of the game with no regrets. I will always appreciate a luxury bag, but I’m done trying to purchase these items or “keep up” on trends when I have other financial goals.

Hervé
Hervé
1 year ago

Even if bags tripled in price overnight, I would keep buying them! A nice bag is one of the many things that bring me joy in this world and I am fortunate enough to have a relatively sizable disposable income. So why not? Life goes by fast: be selfish and keep yourself happy!

Kim
Kim
1 year ago
Reply to  Hervé

Think I still buy those luxury bags if I find something I like but definitely won’t borrow any money nor use my credit cards ( know I will get lots of points 😂) to buy any bags. I just happy to pay cash and that’s my style. It would be interesting to see what will happen to those luxury brands from 2024( Recession time ) Surely lots of people would stop spending crazy $$$$

BarbieDollPink💕
BarbieDollPink💕
1 year ago
Reply to  Hervé

Really? Triple the price? You wouldn’t mind paying $30K for a Chanel Flap or a 30cm Hermes Birkin?

Hervé
Hervé
1 year ago

There is no difference between paying 10k for a bag or paying 30k for the same bag because we all know that the tangible value of that bag is probably $200.

BarbieDollPink💕
BarbieDollPink💕
1 year ago
Reply to  Hervé

Despite what you call the “tangible value” you are entirely missing the point! There’s no difference b/w $10K or $30K for the same bag? Your logic is illogical. If you’ve got money to burn, send some my way; money doesn’t seem to have any intrinsic value to you! Good grief!

Ed B
Ed B
1 year ago

While I wouldn’t necessarily pay 30k for a bag I’d pay 10k for, I also think your logic doesn’t quite fit either. Because in the end there is no way that bag costs 10k at all. Of course money’s “worth”/meaning depends on the point of view: Bill Gates’ bank account wouldn’t even notice the “rounding error” that 20k difference would cost, whereas someone saving up $100/month to slowly get that 10k most certainly would feel it.

But to me what Herve says is more about: It’s already a frivolous expense, I can afford it, so yeah I don’t need a discount and don’t mind the price increases. At that level of frivolity, to many luxury shoppers it’s like being judged about how many pumps of chocolate in their frappucino. They’re already drinking a heavy dessert, lol. Whether they say it out loud or not, a LOT of luxury buyers ARE this way in regards to spending, and it’s not “wrong” or something deserving being told “good grief!” imo. It is just what it is. Indeed pretty much any luxury shopper has “money to burn”. Does most of the world’s population think it’s a great find to buy a bag for 10k? Probably not…

Don’t get me wrong, I don’t disagree with you that I’d love to have the extra money to not care about $20k.

Hervé
Hervé
1 year ago
Reply to  Ed B

You got this exactly right.

#1Snob
#1Snob
1 year ago

Well, they’re CLEARLY increasing the price so you PLEBS can’t buy them- it’s for the upper class ONLY- because that’s who luxury brands cater to! Sorry, not sorry 💅 (Someone had to say it! So get your dirty hands off our luxury bags!!! 🤡🤑👜)

/s

RealSnob
RealSnob
1 year ago
Reply to  #1Snob

haha yes. Poor people are sooo whiny!
Price increase? Get a salary increase! Problem solved.

Jennifer
Jennifer
1 year ago

I’m so glad I got my “holy grail” bag back in 2016. I got the exact bag I wanted but I’d never pay the prices they are charging now. It makes me love my bag even more.

Thehoneybug
Thehoneybug
1 year ago
Reply to  Jennifer

What bag is your holy grail? A black chanel classic flap?

J B
J B
1 year ago

Consumers set the market. As long as the dingus crowd keeps buying and paying the full retail prices they will remain high. The only data points companies understand is sales revenue and/or units sold trending and remaining down from the point of the price increase.

Mone
Mone
1 year ago

I’ve got a small collection that I absolutely adore but I never got the main bag I was chasing with the constant price hikes. I actually feel a lot more content being satisfied with what I have and appreciate my collection more. I’ll always window shop but really happy I’ve got more cash in the bank. People driving this outrageous demand will eventually run out of cash or credit. And it’s not even just the prestige bags, every brand is at it!

ILoveKittens66
ILoveKittens66
1 year ago
Reply to  Mone

Rich people are not gonna run out of cash. Rich people keep getting richer while the middle-class is slowly eroding in most western countries. That’s economic fact.