The Revelation Of Why Recent Fashion Collections Have Become So Expensive

Fashion has never been a realm of modesty. Not only for its exquisite and luxurious beauty, but high-end designs have become the “dream” of fashion enthusiasts worldwide due to their refinement, meticulous attention to detail, and painstaking craftsmanship by designers.

Therefore, these incredibly expensive and extravagant designs are not accessible to everyone.

Last month, Chloé’s Fall 2024 fashion collection – the debut work under the creative leadership of new creative director Chemena Kamali – was introduced through a presentation on the luxury fashion retail platform Moda Operandi.

The prices presented by the collection left fashion aficionados astonished: a brown silk chiffon robe priced sky-high at $26,000. The banana-shaped handbag with gold hardware is priced at $4,900.

This is just one example of price escalation that bewilders the fashion community, especially with brands helmed by renowned creative directors or with massive followings.

For instance, the debut Bottega Veneta collection by Matthieu Blazy caused quite a stir when its leather fringe dresses were priced at nearly $30,000. Last year, Phoebe Philo’s comeback unveiling saw prices so high that some items weren’t even listed.

The reasons for the escalating prices of fashion collections

Certainly, price increases are inevitable. For example, Chanel raises prices annually; in March last year, the starting price for their medium flap bags reached a new high of $10,000, partly due to inflation in production costs and materials. Earlier this year, Hermès also announced a nearly 10% price increase, following the revelation of revenue surpassing $3 billion in December 2023.

As performance improves and inflation rises, luxury brands can justify charging more for their products. However, the latest round of price hikes – combined with inflation, higher living costs, and class consciousness – is making luxury fashion increasingly alienating, creating a divide between those who can afford it and those who cannot.

According to Juan Manuel Gonzalez, founder and CEO of G & Co., a retail and luxury goods consulting firm, price increases are a way for brands to reposition themselves in a more exclusive sphere, especially concerning which type of customer they are associated with. He says, “One way to truly stand out overall is to make it difficult for the masses to purchase the product. Pricing accomplishes that.”

Beyond inflation, brands are justifying these price hikes with arguments about quality. Since taking over at Bottega Veneta, Blazy has placed particular emphasis on craftsmanship. “Overtaking time is a word I don’t want to hear anymore,” he told The New York Times. It leans toward a responsibility to provide something longer-lasting. That often translates to materials: According to the Times, a version of Bottega Veneta’s Sardine bag with a Murano glass handle is being sold at Bergdorf Goodman for $11,000 each.

He shares, “Price is considered a measure reflecting quality and value. Pricing correctly can bring significant benefits to the company.” Just look at Hermès: Last year, the company reported an almost 18% increase in sales after raising prices by an additional 7%.

The recent trend of price increases also reflects the macroeconomic context, as brands deliberately target individuals with high incomes and less concern about economic issues.

Joelle Gruberg, head of McKinsey’s fashion, luxury, and textiles practice in North America, notes: “That consumer segment has been shielded from inflation and has stayed away from the bumpy road that most people have endured in recent years.”

Another reason is the explosion of the $50 billion secondhand market, which has increased both the supply and demand for luxury fashion. This development has raised concerns for fashion houses due to counterfeit reasons; and because the resale channel creates opportunities to access and purchase high-end products without needing to go directly to official stores.

Additionally, because resale platforms set prices based on demand, top brands like Hermès and Rolex are often resold at higher prices than their original retail prices.

Reshaping Customer Segments

Gruberg believes this could help increase demand for luxury brands with more affordable price points – such as Totême, Tibi, or Polène. This is a price range that many brands are exploring. As a result, these mentioned brands are experiencing strong growth: A recent McKinsey report showed that 75-80% of luxury shoppers are loyal to only a few specific brands.

This demonstrates that demand for luxury brands still exists, despite steep price increases – according to Gab Waller, a provider of luxury items for celebrities, high-income clients, and fashion enthusiasts who are willing to spend generously. She shares, “Honestly, I haven’t seen any pushback from customers.” Despite some frustration and disappointment, orders for high-end designer items continue to come in regularly.

She cites an example of a Gucci knit dress from the Spring 2024 collection by Sabato de Sarno, retailing for nearly $3,000 – evidence that affluent customers are still willing to spend. Despite Diet Prada mentioning it as an example of excessively high pricing, Waller says she still receives many requests for purchases.

While she hasn’t received interest in items priced at $20,000, her client base doesn’t hesitate to buy luxury items ranging from $2,000 to $6,000. Additionally, she notes that last month was the highest revenue period since the company was founded.

Whether the outrage over excessively high prices will drive luxury brands back to their previous price points or not remains a subject of debate – but it seems the new pricing demonstrates superior effectiveness (such as Bottega Veneta’s sold-out Murano glass sardine bag and Phoebe Philo’s four-digit selling products).

Gruger believes prices may not decrease, even if brands regret their decision to raise prices: “Once prices have increased, they won’t change.”

There’s still the possibility that luxury brands will introduce lower-priced categories or collections to attract consumers who have abandoned the brand. “At some point, they may regret losing that segment of customers.”