Luxury brands no longer have the urge to tweak price lists. Since the beginning of the year so far, only three brands have raised prices: Hermès, Chanel and Prada. That’ the output from Citi’s Luxury Pricing Tracker, which monitors price changes for 18 major brands in six geographic areas.
Hermès and Chanel are not letting up
In the first half of January, Hermès raised prices by an average of 6% to 7%, reflecting its decision to absorb production cost inflation and unfavorable exchange rates more decisively than in the past. In the first 15 days of February, there were only two brands (not including jewelry and watches) that decided to implement price increases. One is Chanel: +5% on about 20% of the assortment. In past years Chanel has been the most aggressive in terms of pricing policy. The brand has tweaked price lists more than the others with continuous increases, a strategy that looks set to continue.
Prada also increased
The other brand that has decided to increase prices is Prada. The increase amounts to around +4% on around a quarter of the offer. A decision that could be seen as a surprise. Especially in light of the words of its CEO Andrea Guerra who, three months ago, said that “increasing prices is the biggest failure of our work”. “Other than Prada and Chanel, price increases in soft luxury have been relatively scarce this year”, Citi points out.
More entry-level products
Designer labels aside, there is one particular market where price increases are a hot topic: Japan. For Citi analysts, it’s “still the hotspot for tourism spending, thanks to the weakness of the yen. And it’s likely to see near double-digit price increments this year”. On the next steps of the luxury segment, however, Citi writes, “We expect luxury brands to fill the void created by years of price increases by strengthening entry-level product offerings and rebalancing the pricing architecture”. A void that has separated the industry from aspirational consumers, accounting for around 50 million people, according to Bain. The industry lost these customers before 2024. Will they be brought back on board this year?
Images from Hermès and Prada
Read also:
