Wealthy Consumers Push Back Against Years of Rapid Price Growth

Luxury brands have been forced to adjust their pricing strategies in response to slowing demand and growing consumer price fatigue. According to data from UBS, the average price increase for luxury goods this year has been 3%, the slowest pace since 2019. This represents a significant drop from the recent high of 8% in 2022, which was driven by the pandemic-era boom and the resulting surge in demand for high-end goods.

The industry’s shift in pricing strategy is a response to the growing perception that luxury goods have become unaffordable for many consumers. Brands such as Louis Vuitton and Chanel had increased prices significantly between 2019 and 2023 to capitalize on buoyant demand for high-end handbags, clothes, and jewelry. However, wealthy clients are now pushing back, and many luxury goods have become unaffordable for some of the more “aspirational” luxury consumers that drove the pandemic-era boom.

“This is a clear strategic pivot,” said Claudia D’Arpizio, global head of fashion and luxury at Bain. “Luxury brands are responding to intensifying consumer price fatigue, persistent macroeconomic headwinds, and a perceptible softening in consumer enthusiasm. The industry is shifting towards a more measured approach to pricing, which reflects an effort to defend volume while building resilience against looming risks, such as potential tariff shocks.”

The slowdown in price increases is also a response to the growing threat of US tariffs and multiple conflicts that are dashing hopes of a swift recovery for the luxury industry. LVMH, a sector bellwether, is expected to report another decline in quarterly sales as momentum stalls at crucial brands such as Louis Vuitton and Dior. Sales at Kering, another major luxury group, are expected to have declined by 13% in the second quarter, driven by the ongoing struggles of Gucci.

However, not all luxury brands are feeling the pinch. Richemont, for example, has reported its third consecutive quarter of double-digit organic sales growth, driven by its jewelry brands. Sales at Hermès, the world’s most valuable luxury goods company, are expected to have risen by 10% in the quarter, thanks to the brand’s tight control over supply and its focus on catering to the wealthiest clients.

The industry’s shift in pricing strategy is also being driven by changes in consumer behavior. Wealthy consumers are becoming more price-sensitive, and are increasingly seeking out smaller, more “fashion-forward” labels that offer high-quality products at lower price points. As a result, luxury brands are being forced to adapt to a new reality, one in which price is no longer the primary driver of demand.

“Nobody wants to feel like they are being taken advantage of,” said a luxury executive, speaking on condition of anonymity. “Just because top-tier clients can afford it doesn’t mean they don’t notice higher prices. We need to be more mindful of our pricing strategy and make sure that it reflects the value that our products offer.”

The industry’s shift in pricing strategy is a significant development, one that could have far-reaching implications for the luxury market. Whether this will lead to a sustained recovery in the industry remains to be seen, but one thing is clear: the luxury market is undergoing a seismic shift, one that will require brands to adapt and evolve in order to survive.

Key Statistics:

• Average price increase for luxury goods in 2025: 3%
• Slowest pace since 2019
• Recent high: 8% in 2022
• Luxury brands that have increased prices significantly since 2019: Louis Vuitton, Chanel, Gucci, Bvlgari
• Brands that have not increased prices as aggressively: Hermès, Richemont’s jewelry brands, Cartier, Buccellati, Van Cleef & Arpels
• Expected decline in quarterly sales for LVMH: 3%
• Expected decline in quarterly sales for Kering: 13%
• Expected rise in sales for Hermès: 10%