A woman walks in front a Burberry store on March 12, 2021, in New York City. – Emaz/VIEWpress/Corbis/Getty Images/File
A sharp hike in the price of luxury goods in recent years has cost some brands a key group of customers.
About 50 million customers were sidelined from the luxury goods market by 2024 as prices climbed roughly 20% since 2021, according to Aaron Cheris, a partner and head of global e-commerce and marketplaces at Bain & Co.
The deficit has some luxury brands rethinking ways to lure back “aspirational” luxury consumers, who tend to buy at least one luxury item per year and spend between $3,000 and $10,000 annually on fashion, according to McKinsey & Co.
The exclusion of so many consumers wasn’t lost on British luxury group Burberry, which made adjustments ahead of the recent holiday shopping season.
“These past few years, we have been very focused at the top of the pyramid, especially in leather goods. Going forward, we will restore a ‘good, better, best price’ architecture in a luxury context across categories,” Burberry CEO Joshua Schulman said at a company strategy presentation in November 2024.
Schulman added that the shift to more accessible products was “restoring a price architecture” from previous revenue levels. And for the first time in two years, Burberry saw new customer growth globally during December. The company’s third-quarter store sales also grew 4% in the Americas — the United States, Brazil, Canada, Mexico and Panama — which helped narrow global losses.
Unlike wealthier fashion lovers, lower-income consumers lose spending confidence when faced with financial pressures like inflation and the risk of layoffs. Aspirational luxury customers typically spend almost $274 billion a year, making them an important part of the customer base, according to McKinsey.
Cheris said luxury brands overshot in getting more premium and exclusive with higher prices.
“You can’t do that at such an extreme that you cut out the base (of consumers),” he said.
Luxury brands can see a boon off smaller products priced between $400 and $1,000 — price points where less affluent shoppers might be willing to splurge.
Leather goods and accessories, such as belts, eyewear and fragrances, are typically lower-priced products that interest aspirational luxury consumers, said Joëlle Grunberg, who leads McKinsey’s apparel, fashion and luxury sector in North America.
That includes products like a $420 Gucci belt or a $98 perfume from Yves Saint Laurent, two brands owned by French luxury group Kering. While Gucci brought in about $8 billion in 2024 — a 21% decline from 2023, Kering Eyewear generated $1.67 billion, up 6% from 2023.
Burberry’s leather goods and entry-level categories were among the products slated for a return to price points similar to 2022, according to Schulman. It also focused on its outerwear and scarf categories, which were popular during the holiday season. By the end of the third quarter, the brand noted an increase in brand desirability, which measures purchase intent, Schulman said.
Other luxury brands aren’t making the same immediate changes for aspirational buyers, although they will maintain lower prices for leather goods and accessories.
Moët Hennessy Louis Vuitton, the world’s largest luxury group, is among the brands that continue to offer lines of lower-priced leather goods and accessories. But the company’s former chief financial officer, Jean-Jacques Guiony, who currently heads the wines and spirits division, said in October that it would be a mistake to release a new line of affordable luxury products to address the decline in aspirational consumers.
“The current situation is more demand-driven than offer-driven,” he said, noting the issue is not with the company’s product offerings or prices.
High prices for luxury products and economic insecurities have aspirational luxury consumers choosing between fast fashion or high-end luxury, Cheris said. There’s little in-between for consumers seeking value, especially as major chains shut down.
There are two groups of aspirational luxury consumers luxury brands want to win over: young professionals who will stay loyal as their spending power increases, and customers who may never spend $5,000 on a handbag but regularly buy lower-priced products, Grunberg said.
“What the brands are really trying to do is attract consumers. It’s also about moving them throughout the categories — into footwear, ready-to-wear and fine jewelry,” said Jeff Lindquist, a partner at Boston Consulting Group where he works with the fashion and luxury team.
Top luxury brands aren’t going to start selling only affordable items, but experts expect these brands to cater to aspirational luxury shoppers by improving the in-store experience.
Some brands have invested in e-commerce in the last few years, but are also making in-store changes like cutting customers’ wait time in lines, Grunberg said. They’re investing in coaching sales associates to “support experience in-store,” which includes welcoming customers and offering beverages.
“(The in-store experience) is where the brand story comes together and core messages of the brand and one-to-one customer relationships can develop,” said Lindquist.
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