Luxury brands lower prices to survive: Introducing affordable small items to attract customers.

Notice that the latest report shows that as demand for luxury goods slows, luxury brands are launching more affordable small accessories to attract customers to shop. Before this trend appeared, major luxury brands have faced strong consumer resistance in recent years due to significant price increases. Claudia Dapizzio, a partner at Bain & Company, said that up to a quarter of luxury brands are taking this strategy to attract customers to shop. Bain & Company released this report on May 30. Dapizzio said in an interview, "They understand that they need to readjust their strategies." Although introducing more affordable products in categories such as leather goods, footwear, and clothing is difficult, some brands are trying to solve this problem, especially by using textiles. For example, Loewe, a luxury brand under the LVMH Group, is known for its leather bags priced at 5200 euros (approximately $5980). The brand is currently selling a drawstring bag made of sponge-like fabric for 280 euros. Dapizzio said that brands are also introducing lower-priced fashion jewelry, glasses, and beauty products to attract younger consumers. From 2022 to the first half of 2023, luxury goods prices are expected to increase by an average of 12% annually, causing many consumers to hesitate. Bain & Company estimated last year that the personal luxury goods industry, worth 364 billion euros, will lose 50 million customers by 2023 and 2024. The most likely scenario highlighted in Bain's latest report is that after zero growth last year, the luxury goods industry will shrink by 2% to 5% this year. Dapizzio added that excluding the pandemic period, this will be the worst year for the luxury goods industry since the global financial crisis of 2009. Furthermore, while China was growing at the time, it is no longer growing now. Dapizzio also mentioned that Luca de Meo, the CEO of Renault, being appointed unexpectedly as the CEO of Kering Group, the parent company of Gucci, is a "good move" in an industry that tends towards closed-loop operations. She added that the automotive and luxury goods industries are facing similar challenges, with slowing growth and pressure on profit margins.