G ucci ' s strategy shows price h ike for the fourth time after pand emic
On September 24, 202 3, GU CC I revis ed the prices of all products worldwide . This will be the fourth price increase the company has made since the out break of the COVID - 19 pand emic . In particular , the price increase this time has been the largest in history , with some products exce eding 10 percent , and has caused a lot of discussion among industry stak ehol ders .
According to experts , there are three main factors behind the frequ ent price increas es by lux ury brand s such as G ucci . First ly , to deal with ris ing costs , such as ris ing raw material costs and labor costs . Second ly , the " Pres tige Strateg y " aims to maintain and improve brand value . And third ly , it ' s a strong er appe al to the wealth y target .
P ric ing trend spre ading across the lux ury industry
It is worth not ing that G ucci is not the only one making such price changes . Since 202 3, major lux ury brand s such as Louis Vu itt on , Chan el and Her m ès have been ra ising their prices in a row .
Chan el , for example , raised the price of its popular classic f lap bag s twice in 202 3, result ing in a cum ula tive price increase of more than 20%. Her mes has also regular ly adjust ed the prices of its signat ure products , such as Kelly and Bil kin .
The back dr op for such price increas es is due to strong demand in the lux ury market . If we look at the results of LV M H and the K ering Group for the first half of 202 3, the lux ury brand industry continues to grow beyond the post - pand emic recovery , with sales reach ing record high s .
The parado x ical effect of price increas es on brand value
For general consumer goods , price increas es are likely to lead to lower demand , but for lux ury goods , moder ate price increas es can in turn increase brand sc arc ity and status . This is due to an economic phen omen on called the " V eb len effect , " in which the parado x ical psych ology works : the higher the price , the more attra ctive the com mod ity .
" For lux ury brand s , price increas es are not just cost pass - th rough s , they are part of strateg ic br anding , " says marketing expert Y uko Yam ada . " P ric ing that is particularly mind ful of the emer ging wealth y in China and So uthe ast Asia is becoming more prom inent . "
In fact , the latest financial results of G ucci ' s parent company , K ering Group , show that Asia Pacific is the company ' s largest market , and that consumption tr ends in the region are having a major impact on its pric ing strategy .
Pros pe cts for the Lux ury Market
There is a strong view among industry analy sts that major brand s will continue to raise prices in 202 4. This is because global inf lation tr ends and currency flu ctu ations , as well as ris ing susta ina bility costs , are expected to be passed on to prices .
On the other hand , the risk of exces sive price increas es could damp en the purchas ing ap pet ite of the middle class has also been point ed out . A balan ced pric ing strategy is likely to be the time to test the management skills of each brand .
In the end , it can be said that a true lux ury brand is a company with brand power that customers will not leave even if they raise prices . Keep your eyes on the future tr ends of leading brand s such as G ucci .