The rising cost of luxury goods in recent years has significantly impacted consumer behaviour, leading to the loss of a key customer segment for many high-end brands. As prices have surged by approximately 20% since 2021, about 50 million shoppers have been priced out of the market by 2024, according to industry insights. This shift has prompted luxury brands to reassess their pricing strategies and find ways to re-engage aspirational consumers—shoppers who typically spend between $3,000 and $10,000 annually on luxury fashion.
Aspirational consumers are crucial to the luxury industry, contributing nearly $274 billion in yearly spending. Unlike ultra-wealthy customers, these individuals are more sensitive to economic pressures, such as inflation and job market uncertainties. Many have been forced to reduce their luxury purchases or shift toward alternative options, creating a notable gap in the industry’s consumer base.
Recognizing this trend, some brands are adjusting their pricing structures to become more inclusive. British luxury house Burberry, for example, took proactive steps ahead of the 2024 holiday season to restore its “good, better, best” pricing strategy, making luxury more accessible. This strategic pivot contributed to a resurgence in new customers and a 4% increase in sales across the Americas during the third quarter.
Luxury brands must strike a delicate balance between exclusivity and accessibility. Industry experts acknowledge that brands may have overextended their efforts to position themselves as ultra-premium, inadvertently alienating a significant portion of their loyal consumer base.
A viable solution has been to focus on smaller luxury goods priced between $400 and $1,000. Items such as fragrances, footwear, and accessories appeal to aspirational buyers looking for attainable luxury. Notably, brands like Gucci have seen a shift in revenue, with its eyewear division growing by 6% in 2024, even as overall sales declined.
Burberry has also identified leather goods and accessories as key categories for more competitive pricing. By returning to price points closer to 2022 levels, the brand aims to strengthen its desirability among aspirational buyers while maintaining a strong presence in high-end categories such as outerwear and scarves.
While some brands are making immediate adjustments to cater to aspirational consumers, others remain steadfast in their premium positioning. Moët Hennessy Louis Vuitton (LVMH), the world’s largest luxury conglomerate, has resisted introducing a new line of affordable luxury products, arguing that the recent consumer shift is driven more by demand fluctuations than by pricing structures.
Beyond pricing adjustments, luxury brands are investing in elevated in-store experiences to maintain and grow their customer base. Many companies have focused on reducing wait times, training sales associates to offer a more personalized experience, and incorporating hospitality elements such as refreshments for shoppers. These efforts aim to reinforce brand storytelling and deepen customer relationships, ensuring that shoppers feel valued and engaged.
Experts note that luxury brands are not abandoning their high-end positioning but are refining strategies to retain aspirational consumers. By enhancing customer experiences and strategically adjusting pricing, luxury brands hope to rebuild their base of loyal shoppers while maintaining their exclusivity and prestige in the market.
Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial,investment, or other professional advice.
