Surging prices of luxury goods have turned off some shoppers and will likely force labels to rethink both the increases and their wider product offerings, said Bain & Co.

“This isn’t paying off and there is an alienation of the core luxury customers and even, I’d say, the very wealthy customers,” said Claudia D’Arpizio, the partner at Bain in charge of the consultant’s luxury practice. Shoppers are starting “to question the prices of these products that are always the same and are much more expensive”, she said in an interview.

Industry players will review their pricing strategies and focus again on their more accessible product offerings, D’Arpizio predicted. She declined to name any brands, in line with Bain’s policy.

Chanel made headlines earlier this year when its classic medium-sized flap bag broke through the €10,000 threshold for the first time in Paris. The luxury house warned last month that times were more challenging after the demand frenzy observed during and after the pandemic tailed off.

High-end brands rarely cut their prices. Still, Yves Saint Laurent reduced prices on some bags, Barclays wrote last month, a sign it had misjudged what clients were willing to pay. Representatives for the label owned by Kering SA didn’t reply at the time when asked to comment.

Bain expects the personal luxury goods industry will be flat or grow by as much as 4% at constant exchange rates in its most probable scenario this year. That’s after growth rates of 8% and 13% in 2023 and 2022, respectively.

The industry could see more store closures this year as brands look to trim costs, D’Arpizio said.

  - Bloomberg