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Why are used Chanel and Louis Vuitton items sold at sky-high prices?

Báo Gia đình Việt NamBáo Gia đình Việt Nam12/05/2024


In January 2023, Hermès raised prices by 5 to 10 percent, while Dior, Gucci, Saint Laurent and Richemont's Cartier raised prices again. Louis Vuitton did it twice that year.

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Production costs increase

One of the most obvious reasons for price increases is rising production costs. Brands face a variety of costs such as raw materials, labor, transportation costs, energy costs, etc. If these costs increase, brands may have to pass these costs on to the price of the products or services they offer.

Attracting consumers

“The purchasing power of luxury brand consumers has always been reliable, so brands rely on this perception to raise prices and maintain profits,” Zhang Yi, CEO of iiMedia Research Institute, a leading Chinese market analysis company, confirmed to the Global Times.

Indeed, brands are raising prices, especially in China, where people line up outside stores when new products are released. And many consumers speed up purchases to protect themselves against another price hike.

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Why do they do that?

There are several reasons why luxury brands increase prices every year: inflation, rising production costs, and fluctuations between different currencies. The goal is always the same: to keep profits stable. Luxury brands’ strategies are based on the value of product quality and durability, backed by product superiority and customers’ willingness to pay.

According to HSBC, the average price of personal luxury goods in Europe has increased by 52% since 2019.

The increase is believed to be due to the pandemic's aftershocks, which have caused inflation to soar, pushing up the cost of raw materials and labor. Chanel CEO Leena Nair said that Chanel uses delicate raw materials and the production process is labor-intensive and manual, so Chanel's price increase is reasonable given the level of inflation.

In the report “How Powerful Is Luxury’s Pricing Power,” KPMG analysts examined the relationship between price and desire, highlighting how receipts play different roles across different luxury consumer segments and how luxury brands drive brand loyalty among customers.

Analysts reveal the real reason why prices continue to rise: “Luxury goods will increase in price to maintain exclusivity during inflationary times. However, the tactic of raising prices to create desire is becoming less and less effective.”

The Easiest Way to Create More Desire

“Without product innovation or major changes, raising prices is the easiest way for brands to create more desirability: the fewer people who can afford it, the more demand there will be for that bag,” notes Arnold Ma, founder of marketing firm Qumin, which has offices in London and Shanghai.

-> Why are Hermes Birkin bags so expensive?

T. Linh



Source: https://giadinhonline.vn/vi-sao-do-cua-chanel-louis-vuitton-co-gia-ban-tren-troi-d198593.html

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