The COVID-19 pandemic has severely affected businesses worldwide - the loss of human traffic due to movement restrictions or nationwide lockdowns has caused many businesses relying on physical retail to shutter for good.
The high fashion industry is no exception to the impact of COVID-19. Luxury brands have traditionally enjoyed a steady flow of customers, a constant supply of materials, and uninterrupted movement of products. The moment these gets disrupted, luxury brands stand to suffer huge losses as a result.
Most luxury brands have taken the step to raise prices as a result - for example, Chanel has increased prices on their iconic handbags such as the 2.55 and 11.12 by 5 to 17 percent (60% by 2022), and Louis Vuitton has increased prices by 3 percent in March and 5 percent in April. We're here to explain exactly why prices have increased, and how you, as a consumer, can overcome this problem.
Raw Material Costs
Premium materials are a key part of what makes a luxury product, and as a result, the cost of raw materials are also a key factor in affecting the cost of a luxury product.
The COVID-19 pandemic has affected the supply of raw materials, with factories being closed, restrictions in international travel, and nationwide lockdowns occurring throughout the world.
As procurement for materials gets harder, the supply for these materials cannot keep up with the demand to make luxury goods, resulting in higher material costs, and thus affecting end-product costs.
Lack of physical retail spending
The consumer retail experience has traditionally been a key force in driving sales of luxury brands worldwide. After all, when buying something as valuable as a luxury bag, customers would most likely be inclined to visit a physical shop to inspect it for themselves before making the purchase.
However, with nation or state-wide lockdowns being prevalent and restrictions in international travel, it has become harder for consumers to visit physical stores and follow through with their purchase - their only way to purchase items is via an online platform, which could turn away some customers. This has resulted in massive losses for luxury retailers worldwide.
Lower consumer spending power
The COVID-19 pandemic has not just affected business directly, but also the consumers willing to spend. With the economy being hugely disrupted and many countries going into recession, it only makes sense that consumer spending power has also dropped significantly as a result of the pandemic.
This lack of consumer spending power has thus translated to a lack of sales for luxury brands worldwide, destroying their profit margins.
The Second-Hand Market
The combination of these measures has led to luxury brands actively increasing costs for their products in order to reduce loss margins and keep their business afloat. Unfortunately, this hurts consumers looking to buy brand new bags.
However, there is a way for consumers to get their luxury brand fix without paying these increased prices - buying second hand! The resale market for luxury products is huge, and you'll be able to find some decent bargains on some used bags! If the condition of these bags are not up to par, you can always take them to Honest Crafters to get them restored!
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