Consumer Resistance Intensifies as Luxury Giants Finally Hit Pause on Price Hikes

As the luxury goods industry adjusts to a longer-than-expected downturn and growing consumer resistance to annual price increases, global top-tier luxury brands have significantly slowed their pace of price hikes in 2025.

The first five months of the year usually encompass the majority of annual pricing adjustments, as brands typically finalize their yearly budgets and complete most major price changes in Q1. This suggests that the era of high-margin growth driven largely by price increases may be coming to an end.

Brands such as Louis Vuitton and Chanel significantly raised prices from 2019 to 2023 to capitalize on strong demand for premium handbags, apparel, and jewelry. Notably, the price of Louis Vuitton’s Speedy handbag has doubled since 2019, now starting at €1,650. Chanel’s classic large flap bag is currently priced above €11,000, up more than 80% from 2019.

These price hikes were initially effective. According to McKinsey, from 2019 to 2023, 80% of global luxury sales growth came from price increases, with only 20% driven by volume growth.
However, consumers are increasingly unable—or unwilling—to absorb further increases. It is not only the aspiring middle class that is retreating; even truly affluent buyers are expressing discomfort over the psychological impact of repeated price hikes. These customers were instrumental in the luxury sector’s explosive growth during the pandemic.

The current deceleration may indicate a return to a pre-pandemic “normal” inflation rhythm, characterized by modest annual increases of 1% to 2%. One executive at a luxury brand noted that even the wealthiest clients are growing weary of constant increases, saying, “Just because they can afford it doesn’t mean they’re willing to tolerate it. No one likes the feeling of being overcharged.”

Another executive commented that many consumers are shifting toward smaller, more fashion-forward designer labels, turning away from ubiquitous and high-priced traditional brands. Multiple analysis firms and industry executives suggest the pricing slowdown reflects weakening macroeconomic conditions and waning consumer confidence. In an environment marked by high inflation and interest rates, enthusiasm for high-end spending in Western markets has diminished. Geopolitical tensions and trade frictions have also contributed to increased uncertainty across the industry.

According to Bain & Company, the slowing pace of price increases reflects a deliberate strategic shift—from relying on pricing to drive revenue, to focusing more on maintaining volume and brand equity, especially amid rising external risks. This week marks the start of the second-quarter earnings season. However, new tariff threats from the United States and multiple geopolitical conflicts have dampened expectations for a swift rebound in the luxury sector.

According to consensus estimates from Visible Alpha, industry bellwether LVMH is expected to report a 3% year-on-year decline in organic group sales this Thursday. Sales in its core fashion and leather goods division—including Louis Vuitton and Dior—are projected to fall by 6%, due to geopolitical tensions weighing on spending by high-net-worth consumers.

HSBC analysts believe LVMH’s second quarter could represent the trough of the current cycle, possibly signaling the beginning of stabilization. Nevertheless, most luxury analysts have downgraded their expectations for 2025 and postponed forecasts for a sector-wide recovery until the second half of 2026 at the earliest.

Kering is expected to post a 13% decline in organic growth, mainly due to continued weakness in its flagship brand Gucci. Analysts estimate that Gucci’s sales may have plummeted by 25% before the arrival of new CEO Luca de Meo in September. Some luxury groups, however, are navigating the downturn with more stability. Richemont surpassed market expectations last week, achieving double-digit organic growth for the third consecutive quarter, driven primarily by the strong performance of its jewelry brands.

Hermès, the most valuable luxury brand globally by market capitalization, is projected to report a 10% increase in sales this quarter. The brand has maintained strong demand through tight product supply control and a clear focus on its high-end clientele.

Citigroup analyst Thomas Chauvet observed that brands which refrained from steep price hikes during the boom years—such as Hermès and Richemont’s jewelry houses including Cartier, Buccellati, and Van Cleef & Arpels—may have room to increase prices in the coming years.