Are Luxury Prices Way Too High?

At the 2025 NRF Big Show, Jennifer Hyman, CEO and co-founder of Rent the Runway, lamented that the surge in prices of luxury items over the last few years is “actually taking people out of the fashion industry entirely. Their money is now going into other things.”

She noted, for example, that prices on a Chanel handbag have almost doubled, while sticker prices on many items across LVMH’s portfolio of brands, which include Christian Dior, Louis Vuitton, Fendi, Bulgari, Celine, and Tiffany, have soared between 80% and 100%.

“It’s insane, even for a wealthy person,” said Hyman. “A wealthy person going into a store and buying a $6,000 handbag, they’re done with it. They think it is ridiculous. They would rather spend that money now on a vacation or in a restaurant or maybe on beauty or health and wellness.”

She said the success in fashion circles of brands such as Farm Rio and Quince that embrace quality and affordability shows that high-net-worth individuals have also become savvier shoppers.

“The consumer is not as snobby as she was 20 years ago or 30 years ago,” said Hyman. “Like 20 or 30 years ago, if you were rich, you only wore luxury goods. You only shopped in specific stores. You only went to Bergdorf. Now, if you’re rich, you’re smart. You’re like, ‘I’m gonna buy some of my stuff at Bergdorf and I’m gonna buy some of my cashmere at Quince.”

She added, “If you look at price point, you’re like, ‘That’s absurd. I’d rather spend that money at the Four Seasons.’ So, I think that fashion has priced itself out.”

Luxury brands have been increasing prices to offset rising inflationary pressures related to the pandemic, but the price hikes have also been used as a lever to grow revenue and profit as unit volumes decline due to a downturn in discretionary spending as well as weakness in China.

The Wall Street Journal reported in November 2024 that while designer brands have historically increased their prices at twice the rate of overall inflation, strong demand at the height of the pandemic enabled brands “to raise prices much faster than the increase in their own cost base.”

The average U.S. price of global luxury goods is up 61% versus 2019, according to retail intelligence firm EDITED.

McKinsey in a recent report said it believes the price increases in luxury “have reached a ceiling” and are hurting demand from aspirational luxury consumers that the consultancy sees as critical to growth for luxury brands.

As noted by The Business of Fashion, Mulberry, Burberry, and Capri are among luxury brands that recently admitted that rampant price inflation has also caused demand to sag even with their well-heeled clientele.

Bain’s annual luxury study estimates that luxury brands have lost more than 10% of their usual customer base since 2022 as “global luxury consumers, grappling with macroeconomic uncertainty and continued price elevation by brands, cut back slightly on discretionary items.”

“Customers don’t recognize themselves anymore in the luxury price-value equation,” Federica Levato, Bain partner and report co-author, told Vogue Business. “In the past, you bought exquisite high-quality products at a premium price with excellent customer experience and that was luxury. Now, some of these pieces are broken.”

The WSJ said that while some brands known foremost for quality, citing Hermès and Brunello Cuccinelli, continue to do well, the primary beneficiaries of the spike in luxury prices have been “cheaper labels and the resale market.”

In November, Mulberry, the UK fashion brand, announced plans to reduce the prices of most of its luxury handbags to less than £1,095 ($1,383) to broaden its appeal and revive sales. Mulberry’s new CEO Andrea Baldo told Bloomberg, “We were asking the customer for a little bit too much. In reality, we are becoming a kind of value for market in the luxury space.”

LVMH’s financial director, Jean-Jacques Guiony, on a recent earnings call said that introducing more affordable products risks diluting the exclusivity of the fashion house’s brands and margin erosion. He said, “I think it would be a mistake. We have to stay true to what we are.”

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