Business of Fashion

How High Can Fashion Prices Go?

How High Can Fashion Prices Go?

Luxury goods are more expensive than ever, prompting sticker shock on social media. And yet, consumers continue to pay up

  • aprile 09, 2021
  • Tempo di lettura min.

Business of Fashion

How High Can Fashion Prices Go?

In the past, entry-level products were often licensed businesses — perfumes, eyewear — managed by third parties. Today, however, “the entry customer is more opinionated and informed,” which requires a higher level of creativity on the brand’s end, according to Bain & Co.’s Federica Levato.

“In many companies, there are now departments dedicated to working on entry items — sneakers, T-shirts — and many of these categories are really revamped and rebuilt,” Levato said. “It’s the new way to attract a younger customer, but also a larger audience.”

While older luxury customers may balk at the prices of streetwear, young consumers are used to paying a premium on the second-hand market, making some of them less price sensitive than others in previous generations. They also know they can resell items, often viewing the ultimate cost of the product as the sticker price minus the resale value, boosting perceived affordability.

But Levato said it’s less about the price itself and more about “price relevance,” or the perceived value of an item. Cool items like Supreme T-shirts and Telfar bags don’t have to cost a lot to feel exclusive. Consumers still love a deal, expecting markdowns on products that were discounted in the past. Some brands will be able to continue to raise prices, while those that resonate less may have to pull back.

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