The major strategic trend resulting from the pandemic was luxury businesses raising their prices in an effort to offset raw material costs and dampened sales amid store closures.
As the industry grapples with inflation, this shift continues with average advertised prices for significant luxury players in key regions outpacing previous years. While there is less than a 1% difference year-on-year (a 0.84% increase), looking historically and by categories reveal just how much more the luxury consumer is paying now.
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Breaking down the products responsible for absorbing these high prices to customers shows that women’s outerwear is the most expensive category, retailing at $3,395.12 on average. This is higher than menswear at $3,053.94 and boasts a 20% increase on 2019, with products like Dolce & Gabbana’s Jacquard coat with embroidery retailing at $66K, shifting the needle upwards on average prices.
Luxury's status symbol, women's handbags, have noted a 22% increase in average prices vs. 2019. EDITED has found that Louis Vuitton commanded the highest price points with its luggage and alligator skin City Steamer and Capucines BB bags, the most expensive products in this category available online.
Items like outerwear and handbags are subject to higher prices due to their intricate construction and expensive textiles, including fur and exotic skins. Though the industry is shifting away from animal materials, select brands have staunchly continued to include them in collections, contributing to sky-high prices. Times are set to change with Fendi, one of the last few brands to continue to range fur, announcing that it is experimenting with animal-free, plastic-free and lab-grown fur, which has the potential to restructure pricing architecture for these products.
It is interesting to note that it's not just the ultra-luxe products experiencing increases. Even the prices of items representing an accessible buy into designer brands have seen a significant upsurge, reflecting luxury fashion becoming even more exclusive.
With sneaker culture now firmly embedded into luxury assortments, trainer prices have risen 2% for womenswear and 10% for menswear since 2019. Louis Vuitton again dominates exit price points, with its Luxembourg Samothrace and Aftergame trainers clocking some of the highest advertised price points online.
Meanwhile, T-shirts for men are 55% more expensive than in 2019 and, for women, 15%. Four years ago, a cotton jersey tee with a logo at Prada was once $740 online. Now it's $924, a 25% increase. Similarly, 100% cotton logo tees at Balenciaga formally retailed for an average of $595. Today, Balenciaga's City collection averages $650, with the continued buzz surrounding Demna Gvasalia as one of the most prolific designers right now, combined with unstable cotton costs adding to the price tag.
Is this putting customers off? No… well, at least not yet. Fresh lockdowns in China resulted in a halt in spending, while store closures and embargoes in Russia led to select luxury brands missing estimates for Q1 sales. Though the globalization of luxury meant in some cases, like Prada, US sales were strong enough to offset the more volatile regions.
So far in 2022, EDITED has recorded optimistic selling data. Still keen to shop the world's hottest brands that convey a status symbol, global luxury sell outs have climbed 21% vs. 2019.
However, prices have not yet finished rising. Worldwide markets are expected to experience continued economic fallout as a knock-on effect of Russia's invasion of Ukraine and increasing oil prices. The war could also potentially be a catalyst for the decline of globalization, leading to added sanctions across other nations, resulting in further shipping headwinds, reduced delivery times and limitations on region-specific materials. Retailers can't keep passing these high costs on to customers, and keep margins sustainable, making data the best ally for retailers to tackle what's to come.
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