The premium fashion market in the US is facing a significant challenge as prices continue to rise, according to a study conducted by digital consulting firm Lectra’s data analysis solution, Retviews. The study analyzed the pricing and promotion strategies of notable luxury brands including Michael Kors, Coach, Tory Burch, and Kate Spade, and revealed that prices within the premium market segment have increased by 36% in the US within one year. This is in contrast to a 26% increase in the UK and a 20% increase in Europe.
It is suggested that one reason for these aggressive price increases is that affordable luxury brands in the US have not yet experienced a decline in demand. However, the study warns that this may change in the near future, indicating that brands need to be mindful of consumer choices. The study also discovered that price increases varied across different product categories, with dresses seeing the highest increase at 46%, followed by shirts (35%), outerwear (34%), handbags (29%), and suits (25%). This strategic decision by affordable luxury brands is motivated by the expectation that consumers will prioritize spending on dresses and shirts while cutting back on more casual clothing items.
The study also focused on leather goods offerings, which saw significant price increases throughout the year. For instance, Kate Spade increased the number of leather goods items priced between $200 and $399 by 45%, while Tory Burch doubled the share of its leather goods items priced between $600 and $799.
Despite these price increases, discounts still remain prevalent in the premium fashion market as brands aim to attract customers and clear their inventory. However, it is crucial for affordable luxury brands to strike the right balance with discount rates in order to maintain their brand image and preserve added value. For example, Tory Burch applied an average discount rate of 37% on 57% of its assortment in the US in 2022, while the label offered promotions on a smaller range of items (50% of its assortment) with a lower average discount rate of 31% in Europe.
On the other hand, Michael Kors experienced a decrease in the share of non-discounted items by 14% in one year, with an increase in the number of items carrying discounts ranging from 40% to 50% (20%) and discounts between 60% and 70% (25%).
In conclusion, US premium fashion brands are implementing various strategies to address the challenges posed by rising prices. While price increases are driven by factors such as increased demand, brands are also utilizing promotions to attract customers and manage their inventory. Striking the right balance between price increases and discounts is vital for maintaining brand image and value. The fashion industry will continue to monitor these pricing strategies and their impact on consumer behavior.
Useful links:
1. ‘The Premium Fashion Market: Strategies to Combat Rising Prices’ – [article link](https://www.retailcustomerexperience.com/news/the-premium-fashion-market-strategies-to-combat-rising-prices/)
2. ‘How Affordable Luxury Brands are Tackling Rising Prices’ – [article link](https://www.businessoffashion.com/articles/professional/how-affordable-luxury-brands-are-tackling-rising-prices)
