CNN
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A rapid increase in luxury prices in recent years will put some brands on a key group of customers.
According to Aaron Cheris, global e-commerce and marketplace partner and head of Bain & Co, prices have risen by around 20% since 2021, and by 2024, roughly 50 million customers from the luxury market by 2024 was watched.
According to McKinsey & Co, luxury brands rethinking how to seduce “ambitious” luxury consumers are rethinking how to seduce “ambitious” luxury consumers.
The exclusion of so many consumers wasn’t lost in the luxury UK group Burberry, but has been adjusted ahead of the recent holiday shopping season.
“In recent years, we have been very focused on the top of the pyramids, particularly the top of leather products. In a November 2024 company strategy presentation, Burberry CEO Joshua Schulman said:
Schulman added that the transition to more accessible products is to “recover the price architecture” from previous revenue levels. And for the first time in two years, Burberry saw the growth of new customers worldwide during December. The company’s third quarter store sales rose 4% in the US, Brazil, Canada, Mexico and Panama.
Unlike wealthy fashion enthusiasts, low-income consumers lose confidence in their spending when faced with economic pressures such as inflation and risk of layoffs. According to McKinsey, ambitious luxury customers typically spend around $274 billion a year, making it a key part of their customer base.
Cheris said it would overshoot luxury brands to be exclusive at higher prices at more premiums.
“You can’t do that to the extreme as much as cutting off (consumer) bases,” he said.
Fragrances, shoes, small accessories
Luxury brands can see the benefits of small products at prices ranging from $400 to $1,000.
Joel Le Grunberg, who leads the apparel, fashion and luxury sectors of McKinsey in North America, says leather products and accessories such as belts, eyewear and fragrances are usually low-cost products that are interested in ambitious luxury consumers.
This includes products such as the $420 Gucci belt and $98 perfume from Yves Saint Laurent, two brands owned by French luxury group Kering. Gucci brought about $8 billion in 2024, a 21% decline from 2023, while Kering Eyewear generated $1.67 billion, an increase of 6% from 2023.
According to Schulman, Burberry’s leather and entry-level category was one of the products scheduled to return to a similar price range as in 2022. We also focused on the outerwear and scarf categories that are popular during the holiday season. By the end of the third quarter, the brand had focused on increasing brand desirability and measured its purchase intent, Schulman said.
Other luxury brands keep the prices of leather products and accessories low, but they don’t make the same immediate changes to ambitious buyers.
Moet Henneseilis Vuitton, the world’s largest luxury group, is one of the brands that continues to offer a line of low-cost leather products and accessories. However, former chief financial officer Jeanjack Giony, who now heads the Wine and Spirits division, has released a new line of affordable luxury products in October to address the decline in ambitious consumers. He said it was a mistake to release it.
“The current situation is more demand-driven than offer-driven,” he said. The issue is not in the company’s products or prices.
High prices of luxury products and economic insecurity have ambitious luxury consumers who choose between fast fashion and high-end luxury, Cheris said. Very few are for consumers looking for value, especially as major chains are closed.
Two groups of enthusiastic luxury consumers want to win. Young professionals who remain loyal as their spending power grows, and customers who don’t spend $5,000 on handbags but regularly buy low-priced products.
“What brands are really trying to do is attract consumers. “What brands are trying to do is attract consumers. Jeff Lindquist, who also works with the Fashion and Luxury Team, a partner at the Boston Consulting Group.
While top luxury brands will not only start selling affordable items, experts hope that these brands will cater to ambitious luxury shoppers by improving the in-store experience. It’s there.
Some brands have invested in e-commerce in recent years, but have also made changes in the store, including reducing customer waiting lines, Grunberg said. They are welcoming to invest in coaching their fellow sales team members to “support their store experience”, welcoming customers and offering drinks.
“The (in-store experience) is where brand stories come together and the brand’s core message and one-on-one customer relationships can develop,” Lindquist said.
