Is this really sign of lopsided luxury demand and supply economics during the greatest recession since the Great Depression or is this evidence that as Wall Street decoupled from Main Street, growing inequality has affected the biggest bulk of luxury consumers – the middle class.Ī Different Story for Mid-tier Luxury brands That said, Gucci and Prada are not raising prices for the moment. According to Chanel, raw materials and the disrupted luxury supply chain resulting from global lockdowns have increased product shortages in essence, what Chanel is saying is that the mismatch of high demand in the midst of low supply necessitates raising prices. Typically outpacing inflation, hard luxury goods like Rolex watches enjoy 8% price hikes each year for soft luxury goods like apparel and fine leather goods, two price hikes per year are not uncommon – typically a reflection of demand or the increased costs of artisan labour. Indeed, the raising of luxury goods prices has been par course for decades. “In the current environment, the price of certain raw materials, which were already difficult to procure due to the quality we require, has increased again.” – Chanel spokesperson It was a phenomenon that created queues outside brand boutiques across major metropolitan East Asian cities in China and South Korea, prompting local officials in Seoul to assess whether orders to shut those stores were required to stem a potential second wave of covid-19 infections. May saw Chanel raising prices between 5% to 17% on its classics like its Gabrielle and Chanel 19 bags. Louis Vuitton raised prices 3% initially and then another 5% in April. In support of this idea that luxury retail has indeed turned a corner, brands like Chanel and Louis Vuitton were hiking prices as early as March 2020 in order to recover lost ground from lower sales amidst retail lockdowns. The Covid-19 pandemic has literally savaged the global economy and crated retail spending but rapid sale of the Air Dior collection looks like depressing economic conditions have done little to dampen consumer demand for luxury goods. Is this a sign that the Luxury Industry is recovering? Air Dior is the fastest selling luxury collaboration of 2020.
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