Luxury Brands Price Increase1 - Skywire London
by Liz Seyi Digital marketing managerHow much ‘luxury’ do high-end brands have
to increase prices?
It probably won’t be much of a surprise to learn
that there has been a trend of rising prices across every sector of the UK and
the global economy in recent times. And according to multiple reports, many of
the names that we most associate with the last word in desirability and
opulence seem to have responded accordingly.
Indeed, a recent article from Forbes cited
such examples as Louis Vuitton raising its prices on dresses, shoes and
handbags by an estimated 6% to 7%. Whilst Tag Heuer reportedly intends to
put up costs by around 5% to 6%.
To what extent are luxury brands being
forced to act, and how much are they simply choosing
to act?
This is a tantalising question for many industry
observers. Forbes contributor Walter Loeb wrote that while prices creeping
up is nothing new among premium brands, the particularly sharp rises seen
lately indicate that costs have increased. And management has been forced to
take action.
Even the highest-end brands are not immune to the
effects of spiralling inflation, which has impacted on costs of manufacturing and
expenditure incurred in shipping goods. Loeb cited such data as food
prices have gone up by 7% since 2019, and apparel prices going up by around 14%
in the same timeframe.
Amid talk of other potential contributing
factors, such as higher interest rates and upward pressure on salaries, it is
also interesting to ask whether some price rises have occurred due to luxury
brands being better able to do so without customer resistance than non-luxury
brands.
Agence France-Presse has indeed speculated on
this, suggesting that the producers of luxury goods hiking their prices may
even help make their products more desirable to customers.
The same AFP article quoted the CEO of LVMH –
which controls a wide range of prestigious brands – as stating: “Our advantage
over many other companies and groups is a certain price flexibility; i.e. we
have the means to react to inflation.” Indeed, UBS analysts have estimated
that such top brands as Louis Vuitton have actually raised their prices some
two-and-a-half times higher than the inflation rate over the past two decades.
They add: “Pricing power remains one of the key characteristics of the luxury
goods industry.”
Place yourself profitably to succeed with
your brand in 2022
Naturally, continual and sharp price increases
are not a tool that even the best-insulated luxury brands are likely to be able
to call upon forever. Demand can, and likely will, slow for particularly
susceptible businesses operating in this space, so they will always need to
ensure they achieve the right balancing act.
Partnering with a specialised and experienced
digital marketing agency could be one step to help ensure your premium brand
makes only the best-advised moves during 2022 and beyond.
If you are considering making a choice, London
based and globally astute Skywire Luxury Digital Agency provides solutions for luxury
brand growth here.
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Created on Jun 10th 2022 23:51. Viewed 121 times.