Lines outside of Chanel in China started growing when lockdowns eased and people clamored to trade sweatpants for luxury. But now those lines are just getting longer and branching out to more countries as rumors began circulating that prices for luxury handbags were about to soar.
A source told WWD that luxury brands started hiking prices in France on May 7 and hit other stores across Europe on May 11. The U.S. could see higher prices on May 25.
Louis Vuitton raised prices two times since February, the company told WWD. Conversely, Prada and Gucci told WWD they don’t have price hikes in the works right now.
Chanel said on Wednesday (May 13) that it was upping prices between 5 percent and 17 percent worldwide because of price hikes in materials due to the pandemic. “These adjustments are made while ensuring that we avoid excessive price differentials between countries,” the company said, as reported by Reuters.
American consulting firm Bain & Company estimated that global luxury sales could drop off by as much as 35 percent in 2020. Top designer brands could up prices to offset those losses, which are largely related to the pandemic.
“It’s a strategy to defend margins,” Luca Solca, luxury goods analyst at Bernstein, told Reuters.
Tiffany jewelers upped prices 10 percent on some items in South Korea, a Seoul store manager told the news service.
“Tiffany regularly reviews its pricing strategy including within each of the markets in which we do business to reflect among other things, currency fluctuations and business input costs,” a Tiffany spokesperson said.
Chinese consumers account for 35 percent of the global personal luxury goods market, Bain’s research shows.
Luxury brand executives told Bain that January started strong but otherwise “closely mirrored the spread of the virus.”
Online luxury has remained resilient, but brand name stores and department stores have seen sharp drops, a PYMNTS study shows. Bain & Company said it anticipates that recovery to 2019 levels will not occur until 2022 or 2023.