Why Luxury Brands Prices Increase So Fast?

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Every girl want a Chanel bag, a pair of Roger Vivier, and a diamond from Harry Winston. Every boy want a pair of trainers from Raf Simons, a suit from Saint Laurent, and hand-painted Dries Van Noten florals clothes. If you are like me, occasional splurge on designer brands and so-called "luxury brands", you will have noticed that their price has been rising so fast. In 2010, when I was hunting for the latest IT bag on luxury online retailer Net-a-Porter, it was all about Mulberry's Alexa bayswater which costs roughly RM3,500. After few years, Mulberry new bayswater for AW13, The Primrose, is smaller than Alexa one but cost is about RM6,500. It's kinda virtually impossible to find an IT bag under RM5,000. The price of an Hermes Kelly bag have risen from RM15,000 to RM25,000. And Carrie Bradshaw's famous Manolo Blahniks have risen in price RM1,500 to RM2,400. Luxury brands have raised prices by 60% in a decade, according to the U.S. Bureau of Labor Statistics. What are their intention? Just to increase appeal? 

From shoes to handbags to ready-to-wear. What's exactly driving the rising prices? It's too easy to get a pair of nice decent heels for RM50 these days, even easier to hunt a fancy RM50 dress at fast fashion stores. It is feeling so good those fast fashion stores are selling trendy pieces with so light prices, but the cost of luxury pieces continues rise and rise the price. Read on to find out more. 

One of the reason is expensive and rare raw materials. Thank you global financial crisis has started, cotton prices has been increasing. As of June 2013, cotton costs 13% increase year-on-year. Rising labor cost is another reason. In China, the country where many brands are manufactured. In 2012, the wages of private sector workers have increased 14%. Of course, transport costs associated with manufacturing in Far East can blame for the increase in the prices of luxury pieces. 

But for some brands, having to factor in seasonal markdown is another factor in raising the costs. It is common to see the boutiques and concept stores give discount of more than 70%. After all, there is getting more people, including myself are now waiting for discount before buying the iconic pieces. What's the point to get a pair of shoes for RM2,000 when you can get it for RM500 a few months later?  Designer brands that always go on sale normally be forced to artificially inflate their prices to address margin pressure. It's good for savvy shopper like us wait for discount, but it's bad for the designer brand because this could directly affect brand loyalty.

But the biggest culprit in the increasing prices of these luxury pieces is the fact that there are more people willing to pay for it. Yes, it is! According to a report by Capgemini, a management consultancy, the number of high-net-worth individuals in the world increase by 9.2% in 2012 to 12 million people. These fellas have combined total assets amounting to $46 trillion. 

I am not telling you, "Do Not Buy The Luxury Pieces!" I did many research just for one purpose - explaining why these brands prices increasing so fast. Fashion is not superficial thing and do not think that because of the increasing the prices of the luxury brands then turn your ass all the way to fast fashion stores or get yourself a replica and ignore the craftsmanship behind the design. Do not go for luxury brands because their prices increase crazily and that's make you think that this is valuable and durable to have one. In France, people do not idolize well known brands but they still paying respect to those luxury brands and their hard works. Keep in mind that think what suits you the best instead of blindly looking for a luxury labels.

Last but not least, Hermes is going to increase 6-13% of the selling price after 13th January 2014. 


Evangeline Yan



XOXO





10 comments

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