Luxury brands will focus on certain types of consumers in 2025.
In recent years, luxury prices have risen sharply, and we have been watching a key group of shoppers. Bain & Co. According to Aaron Cheris, by 2024, approximately 50 million potential customers had been removed from the market. This is because costs have jumped by around 20% amid the overall luxury slowdown since 2021. With this shift, luxury brands are shoppers who purchase at least one luxury item each year and spend between $3,000 and $10,000 a year, as defined by McKinsey & Co.
One of the major brands that cater to this shift is the luxury UK label Burberry. Ahead of the holiday season, brands are adjusting their price structure to appeal to more audiences and heading towards more accessible services. The company’s efforts were successful. In December, Burberry experienced its first new customer growth in two years, with third quarter store sales rising 4% across the Americas, CNN reported.
Ambitious consumers, who often deal with financial pressures such as inflation and layoff threats, typically spend around $274 billion a year and become key group brands, McKinsey said. Sheris added that luxury companies are overestimating the demand for expensive premium products, and many ambitious shoppers are being priced. However, by focusing on low-priced items, especially the $400-$1,000 range, the brand can thrive. Products like leather products, belts, eyewear and fragrances (accessories that offer luxury at more accessible prices) are gaining interest.
Take a look at Gucci, which offers a $420 belt or a $98 perfume from Yves Saint Laurent. Despite Gucci’s $8 billion decline in revenue in 2024, Kering Eyewear (part of its parent company) has seen a 6% increase in sales, indicating the potential for affordable luxury goods.
Burberry’s focus on reintroducing leather products and products that are accessible to the outerwear and scarf categories also helped to increase the brand’s desirability by the end of the third quarter. However, not all luxury brands are changing their pricing strategies any time soon. For example, French conglomerate LVMH continues to offer low-cost leather products, but resists the release of a completely affordable product line.
Luxury brands aren’t giving up high-end customers, but the focus on ambitious shoppers is clear. Many are enhancing the in-store experience, investing in improving sales assistant training, reducing wait times, fostering loyalty and repeatedly seducing buyers with low tickets.
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