When it comes to pricing, luxury is still living on another planet
While the most recent Versace catwalk show was divided opinion on its creative merit, it united opinion on the prices. Dario Vitale’s polarising collection featured entry level product, like jeans, listed at £,3000. Social media channels went into a frenzied meltdown, directly calling out and comparing the baulkable prices to vintage pieces, which had directly inspired the new SS26 collection.
Many such items were available instantly on resale and vintage sites for a fraction of the new price. It was another example of the farcical nature of designer pricing and the tone deafness of the luxury fashion industry to address what so many people have been saying.
At the same time, the European Commission announced a sizeable fine on fashion brands Gucci, Chloé and Loewe for fixing wholesale prices. The commission's investigation revealed that the three companies restricted the ability of independent third-party retailers to set their own online and offline retail prices. This kind of anticompetitive behaviour was found to have increased prices and reduced choice for consumers. The fines totalled €157 million, but had significant reductions for ‘cooperation’.
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In particular, the three fashion companies interfered with their retailers' commercial strategies by imposing restrictions on them, such as requiring them to not deviate from the recommended retail prices; maximum discounts rates; and specific periods for sales. In certain cases, and at least temporarily, they also prohibited retailers from offering any discounts. Gucci, Chloé and Loewe strived to have their retailers apply the same prices and sales conditions they applied in their own direct sales channels.
These anticompetitive practices deprived the retailers of their pricing independence and reduced competition between them. At the same time, the three luxury brands aimed to protect their own sales from competition from retailers. In addition, Gucci imposed online sales restrictions for a specific product line by asking its retailers to stop selling the product online. Gucci's retailers complied with these instructions.
The biggest question surrounding this is, why is it just these brands? All three, Gucci, Chloé and Loewe, are part of much larger groups, Kering, Richemont and LVMH, respectively. It is difficult to believe that other brands within these groups weren’t following the same methods of controlling wholesale channels; forcing outside partners to follow the same rigorous pricing architecture and discount windows.
Gucci is one of three brands to be fined after imposing pricing restrictions on wholesale partners
Wholesale partners will always want to keep these brands happy to remain stockists, and follow the rules the brands set out. Brands would monitor this and insert a form of control all under the dubious umbrella of ‘brand protection’. It is interesting why the European Commission is picking up on this now and why just three brands. No doubt, this form of brand control kept inflated prices higher for longer.
The practices are said to have ended, for all three fashion companies, in April 2023, when the commission carried out unannounced inspections at their premises. How many other luxury companies did the commission inspect and what has changed since that time?
People have been moaning about high prices for many years in the luxury industry, particularly when the quality of the products has deteriorated. It feels, for the vast majority of brands, it has fallen on deaf ears.
JW Anderson, was once a quirky brand that had ‘fun’ pricing. While never cheap, it filled that niche for something special without having to forgo your mortgage. Since its pivot to ‘lifestyle’, it has returned with moren inflated pricing which takes it drastically from its youthful pricing. Its curated antique pieces – £1,500 for a crushed watering can – highlight the incredible rebranded inflation.
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One ray of hope is Celine. It looks reasonable by comparison. The new flat Luggage bags are £1.500, not cheap, but not absurd by luxury standards, and the new Lulu bag, which ranges from £1.200 to £1.900. Cashmere carves are a gifting price of £435.
It genuinely feels like Celine is winning here. The two shows by new creative director, Michael Rider have been really well controlled and delivered. It respects what went before yet feels fresh.
It has realism for a Parisian brand that wants to be more honest about pricing and get its products into people’s hands. It also shows an Americanisation of the brand, which is reflected in the preppy look. American brands understand mass luxury and the sweet pricing spots to drive sales. Burberry has moved in this direction too.
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If Versace prices were a shock, brace yourself for Chanel. Matthieu Blazy ‘won’ Fashion Month with an acclaimed debut collection for the storied house. Word has it, however, that the celebrated Chanel X Charvet white shirts will retail at around £4,000. For context a plain white Charvet shirt from its own collection, and presumably of very similar quality, can be yours for around £500. Like the planetary backdrop at Blazy’s show, this price premium is truly out of this world.
Main image: Chanel SS24 (PA).
