The luxury fashion industry is undergoing a significant shift as brands grapple with declining demand and rising inflation. Key players, including Mulberry, Michael Kors, and Burberry, are re-evaluating their pricing strategies to regain consumer trust and drive sales.
Accessible Luxury Under Scrutiny:
Mulberry, once a champion of “accessible luxury,” is now scaling back its price points. CEO Andrea Baldo acknowledged that the brand had been “asking the customer for a little bit too much” and committed to bringing most bags below the £1,100 threshold. This move reflects a broader industry trend towards more affordable luxury offerings.
Michael Kors, owned by Capri Holdings, is also taking steps to lower prices. Chairman John Idol admitted that the brand had “attempted to elevate price points too quickly” and reduced its signature product offerings, leading to deeper discounts. Versace, another Capri brand, will also introduce more affordable assortments.
Burberry’s Repositioning:
Burberry, under new CEO Joshua Schulman, is shifting its focus towards a more accessible luxury positioning. The brand plans to reduce prices on most bags to below €2,000, recognizing that its previous strategy of benchmarking against top luxury names had alienated consumers.
The Price-Value Equation:
Industry experts agree that the luxury sector’s slowdown is linked to a disconnect between price and perceived value. Brands have raised prices significantly in recent years, exceeding historical norms and consumer expectations. This has led to a decline in demand, particularly among middle-class consumers.
The Future of Luxury:
While accessible luxury brands have more flexibility to adjust their pricing strategies, pure luxury players like LVMH, Kering, and Richemont face a more complex challenge. Lowering prices is not an option, and brands are reluctant to return to aggressive discounting.
To address the situation, luxury brands are exploring various strategies, including:
- Product Innovation: Introducing new, innovative products to excite consumers and justify premium price points.
- Creative Leadership: Appointing talented designers to drive brand storytelling and product differentiation.
- Targeted Marketing: Focusing on high-net-worth individuals and emerging markets to maintain sales momentum.
As the luxury industry navigates these turbulent times, brands that can effectively balance exclusivity, innovation, and affordability will emerge as leaders in the post-pandemic era.
