What is the Inflection Point for Luxury’s Price Increases?

Luxury brands are implementing significant price increases to address rising costs and maintain exclusivity. For example, Chanel and Hermès have raised prices substantially in recent years. These increases are driven by the need to cover costs of raw materials, labor, and transport, as well as to adjust for currency fluctuations and inflation. Higher prices also enhance brand prestige and desirability.

However, there are potential downsides. Consumers may turn to secondary markets or competitors with more affordable options. For instance, a Prada Galleria bag can be purchased for significantly less on resale platforms like The RealReal. This trend has fueled the growth of “superfakes” and dupe culture, especially among younger consumers.

Despite these risks, luxury brands continue to escalate prices to uphold their exclusive image, but this strategy raises questions about the sustainability of such increases.