Cnn
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A sharp increase in the price of luxury products in recent years has cost some brands a key group of customers.
About 50 million customers have been sidelined the market for luxury products by 2024, prices, prices have increased by around 20% since 2021, according to Aaron Cheris, partner and world electronic commerce chief and Bathroom markets & Co.
The deficit has certain luxury brands rethink the means to attract “Ambitious” luxury Consumers, who tend to buy at least one luxury item per year and spend between $ 3,000 and $ 10,000 a year in fashion, according to McKinsey & Co.
The exclusion of so many consumers has not been lost for the British luxury group Burberry, which made adjustments before the recent holiday shopping season.
“In recent years, we have been very concentrated at the top of the pyramid, especially in leather goods. In the future, we will restore a “best price, better, better” Architecture in a luxury context in all categories ”, Joshua Schulman, CEO of Burberry said during a business strategy presentation in November 2024.
Schulman added that the transition to more accessible products was to “restore price architecture” of previous income levels. And for the first time in two years, Burberry saw new customer growth worldwide in December. Society sales in the company’s third quarter also increased by 4% in the Americas – the United States, Brazil, Canada, Mexico and Panama – which has helped reduce global losses.
Unlike richer fashion enthusiasts, low -income consumers lose the confidence in expenses in the face of financial pressures such as inflation and the risk of layoffs. Ambitious luxury customers generally spend nearly $ 274 billion a year, making it a large part of the customers, according to McKinsey.
Cheris said that luxury brands have exceeded the fact of becoming higher and exclusive with higher prices.
“You can’t do this to an extreme so that you have cut the base (consumers),” he said.
Perfumes, shoes and small accessories
Luxury brands can see a boon of smaller products between $ 400 and $ 1,000 – prices where less rich buyers could be ready to make follies.
Leather items and accessories, such as belts, glasses and perfumes, are generally low -cost products that interest ambitious luxury consumers, said Joël Grunberg, who leads the McKinsey clothing, fashion and luxury and luxury sector in North America.
This includes products like a Gucci belt of $ 420 or a $ 98 perfume from Yves Saint Laurent, two brands belonging to the French luxury group Kering. While Gucci reported about $ 8 billion in 2024 – a drop of 21% compared to 2023, Kering Eyewear generated $ 1.67 billion, up 6% compared to 2023.
Burberry and entry -level leather goods categories were part of the products planned for a return to prices similar to 2022, according to Schulman. He also focused on his categories of outdoor clothing and scarf, which were popular during the holiday season. At the end of the third quarter, the brand noted an increase in the brand’s desirability, which measures the intention of the purchase, said Schulman.
Other luxury brands do not make the same immediate modifications for ambitious buyers, although they will keep lower prices for leather and accessories items.
Moët Hennessy Louis Vuitton, the largest luxury group in the world, is one of the brands that continue to offer leather goods and low -priced accessories. But the former financial director of the company, Jean-Jacques Guiony, who currently heads the Wine and Spirit Division, said in October that it would be a mistake to publish a new range of affordable luxury products to resolve the decline of ambitious consumers.
“The current situation is more focused on demand than supply,” he said, noting that the problem does not concern product offers or business prices.
The high prices for luxury products and economic insecurities have ambitious luxury consumers who choose between fast fashion Or high -end luxury, said Douri. There is little intermediary for consumers who are looking for value, especially as The main closed channels.
There are two groups of ambitious luxury consumers that luxury brands want to win: young professionals who will remain faithful as their expenditure power increases and customers Who can never spend $ 5,000 on a handbag but regularly buy at low prices, said Grunberg.
“What brands are really trying to do is attracting consumers. It is also a question of moving them in the categories-in shoes, ready-to-wear and fine jewelry, “said Jeff Lindquist, partner of the Boston Consulting Group where he works with the fashion and luxury team .
Best luxury brands Will not start to sell only affordable items, but the experts expect these brands to be aimed at ambitious luxury buyers by improving the store experience.
Certain brands have invested in electronic commerce in recent years, but also brought in store changes such as reducing customer waiting time, said Grunberg. They invest in selling coaching to “support the experience in store”, which includes welcoming customers and the supply of drinks.
“(The store experience) is the place where the history of the brand meets and the basic messages of the brand and customer relationships one to one can develop,” said Lindquist.