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The one retail sector where soaring prices won’t stop people buying
Rare, precious and oh so expensive. Even as luxury prices continue to rise, consumers keep opening their wallets. From the upcoming Summer issue out on December 8.
In my role as fashion editor, it’s sometimes difficult to ascertain what good value is. My perception is skewed by constantly looking at the luxury landscape, where handbags frequently start in the thousands, where it’s not unusual to spend more than $900 on a pair of shoes, where even a T-shirt can cost hundreds of dollars. I remember looking at a Bulgari handbag a year ago and thinking it was such “great value”. It cost more than $3000.
Yes, I am utterly out of touch; call it a hazard of the trade.
It seems I’m not alone because, despite the rapid rise in the cost of living, inflation fears and two international wars, there are two key trends in this space: luxury prices are continuing to rise, and consumers keep opening their wallets.
How high can prices really go? There seems, right now, to be no limit. Simon Letch
A new Bain & Co report shows that this year, the luxury industry grew by more than 8 per cent overall (in Australia, it was 6 per cent). By the end of 2023, it’s expected that global luxury sales will sit at €1.5 trillion, or $2.5 trillion, or 833,333,333 Bulgari bags.
It all begs the question: how high can prices really go? There seems, right now, to be no limit. In November, Louis Vuitton menswear creative director Pharrell Williams released a new handbag, the Millionaire Speedy.
It wasn’t just a cute name – the bag literally costs a million dollars (US) and will be made to order from crocodile skin. It comes on the heels of former Celine designer Phoebe Philo’s comeback line, funded by LVMH and hotly anticipated by the fashion set.
The range featured an $US8500 tote bag, a $US19,000 dress and a “hand combed embroidered coat” that is listed as “POA”. Twenty-four hours after it debuted online, two-thirds of it was sold out. At the time of writing, there’s almost nothing left. The line didn’t even ship to Australia, but I know of die-hard fans who paid extra for their orders to be delivered to US postal addresses and then forwarded on.
Shein’s headquarters in Singapore. During this year’s Black Friday sales, It seemed like everyone not at the top end of town was desperate to move stock. Bloomberg
So: prices are rising (Chanel handbags, on average, increase by 10 to 15 per cent year-on-year, making them a better investment than property) but sales do not seem to be slowing down. That’s one end of the spectrum, of course. At the other end is a rabid passion for deep discounting that is so rife, there are some people (like Copenhagen Fashion Summit founder Eva Kruse) who think legislation should be enacted to limit when retailers can place products on sale.
It’s a race to the bottom at this end, fuelled by the likes of Temu and Shein, retailers for whom the phrase “fast fashion” is an understatement. Instead of raising prices, these companies raise volume and sell, sell, sell. Looking around at the Black Friday sales this year, which started well before the end of November (as is traditional), it seems like everyone not at the top end of town was desperate to move stock.
Neither of these approaches is good for fashion. At the high end of the market, driving prices further upwards will eventually turn away potential customers and even those who might aspire to be customers someday. It means that luxury will be out of reach for most people; it will cater only to the very, very top clientele.
It won’t mean the appetite for luxury will decrease in other segments of the market, of course – they’ll just look for it elsewhere (like the counterfeit market). And at the bottom end, where prices are in the single digits (there’s a pair of socks on Temu for $1.18), fashion has become so inexpensive that it is seen as disposable, a single-use item like a takeaway coffee cup.
Luxury houses will tell you their prices are justified because the products are handmade, they are made with rare and precious materials, and they are the result of meticulous design and artisan craftsmanship. That may all very well be true, and as someone who regularly handles these items in showrooms and studios, I can attest that in most cases, it is.
But in others, the simple act of upping the price gives the impression that something is more valuable than it really is. The bubble will only burst when consumers start turning their backs and closing their wallets. Right now, it’s stretching pretty thin.
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