Luxury brands diversify with $160 lipsticks, $1400 accessories amid slump
Hello Kitty Jewelry and a Panda Superflat Louis Vuitton X Murakami Keychain and a red and white -braided accessory are connected to a Louis Vuitton bag.
Edward Berthelot | Getty Images Entertainment | Getty Images
When almost all shoppers are faced with a sense of sticker price shock, some luxury fashion lines are called new, less expensive products to stay relevant and attract new consumers.
Louis Vuitton’s long -awaited beauty collection signs last month by hitting branded stores and privileges and points to the 171 -year -old recurrence Lvmh-Lüks Titan.
And although the signature fragrant lipsticks are not cheaper than a pop $ 160, they show a wider change among luxury players who shop more than the door without diluting their flagship offers.
Luca Solca, the president of the global luxury goods in Bernstein, who examined the diversity of luxury brands extensively, told CNBC to CNBC via e -mail, “This is a very suitable move,” he said.
“Mega brands will be wise not to use lower absolute price categories to sell most of their basic products and to establish a wider relationship. [range of] Willing consumers, “he said.
As creative director, respected make -up artist Pat McGrath and Louis Vuitton, 55 lipstick, 10 lip balm and eight eye shadow palette and accompanying $ 2.890 -dollar mini -body carrying bag – young, may be hoping to appeal to the cult after US consumers.
Prada follows Lvmh’s Celine, Dries van Noten and Miu Miu, which is similar to cosmetics. “Beauty, high GM% [gross margins]”Bernstein said in a note in March.
In the meantime, the explosive popularity of the lab of Keychains, “Treatonomics” tendency, even when cutting large tickets to the small luxury, even when cutting large luxury, Koç, Longchamp and Louis Vuitton, including a new wave of exaggerated bag jewelry jewelery, including an option of $ 1,420.
Luxury diversification, industry industry slowdown, US tariffs and wider cost prints emerges while grappling.
Morningstar Senior Özkaynak Analyst Jelena Sokolova, with a decline in Chinese demand, referring to another period of softness in the sector, “Brands 2015, 2016, using the game book.” He said.
“At that time, the brands returned to street clothes, for example, sneakers, smaller handbags and bag jewelry,” he said. “These efforts in the past, a general Pick-up supported by a thousand-year-old consumer recruitment was quite successful with the increasing share.”
Enlarge the luxury market
This time, the luxury industry, since 2022, a Covid period explosion consumers as steep and often not falling as what they see as the price increases grow under the pressure of discomfort.
In a report dated 2022, the Bank of America Securities said that the income and growth of the sector will be determined by three factors: the double -doubled (full) of the total addressable market, including new products; Increased cultural interest; And the ongoing brand to increase desireability to re -invest.
Bank of America Securities’ European consumer request and the authors of the report to CNBC via E -Post, said, “New categories expands full and increases the level of cultural relevance,” he said.
Other examples of new luxury categories include shoes, glasses, perfumes and small leather products.
Brown Louis Vuitton Monogram Coat Coat-with-Canvas Mini Stex bag, Copenhagen during Copenhagen Fashion Week, During Copenhagen Fashion Week in Denmark, two labubub pelush bag attraction is carried with Tan Vachetta Leather Rulled balls and yellow and ceremonial pumpkin motif.
Edward Berthelot | Getty Images Entertainment | Getty Images
Lower price entry points can bring a younger and wider consumer base to the ecosystem of a brand, and in the hope of developing a sense of loyalty of shoppers.
“Young customers have increasingly interacted with cultural relevance level, online participation and advertising luxury. As these customers increase the income ladder, as more existence and reserves continue, this younger generation will control the structural tail of the luxury demand, so it will control a larger part of the global richness and consumption power of luxury demand.
Cecile Cabanis, the Chief Finance Manager of LVMH, accepted this strategy during the second quarter of the French luxury holding in July.
“You also need to connect with the young generation,” he said to investors. He said: “You also need to have an offer that you can meet them, get them on the ship, and then go through your value staircase.”
“We refuse to do this with cheap bags. Vuitton. Vuitton is always the best desirability, always the best quality. So you use accessible product categories to do this: perfume, small leather products and we really work that way [the] Portfolio, “he said.
A balance
However, brands have a good balance to strike to expand their attractions without diluting their exclusiveness.
Sokolova said that pushing into new, lower price categories in order to ensure that it continues to appeal to more wealthy consumers should be made as well as expanding a brand’s more expensive product offers.
Some brands learned this lesson in a difficult way. In the past, the heavy discount from Burberry and Gucci’s appreciation has fought to regain his status among those who spend high.
It is still seen whether the last stage of the category diversification of brands will be successful during the current economic pressures and compressed consumer expenditures.
“It was successful 10 years ago. Until now, [too] Early, Sok Sokolova said.
“Any brand needs to establish itself with a new generation of consumers, otherwise it will age with the current buyers. [But] Ultimately, willing consumers are more economically sensitive, so a stronger economy is needed to expand their purchases in a sustainable way. “
