Already a subscriber?Monica Tarca does not make handbags for luxury customers – and she believes it’s the reason her business, Vestirsi, is set to triple revenue, from $1 million in 2023 to $3.5 million this year.
In April, French luxury brand Hermes released its first-quarter earnings report, with revenue of €3.8 billion . Leather goods accounted for nearly half of this, with €1.6 billion of sales. At LVMH, owner of Dior, Loewe and Fendi among others, 2023 revenue sat at €22.8 billion, up 8 per cent year-on-year.
For retail expert Joanne Goldman, who has worked with Australian brands like Christopher Esber and Rebecca Vallance, such pricing is not determined arbitrarily. Steady price increases – some fashion houses are rumoured to raise the cost of goods annually, if not more regularly – are part of the luxury industry, says luxury brand strategist Ana Andjelic.“The luxury industry has traditionally operated around the Veblen effect,” she says, referring to the theory proposed by economist Thorstein Veblen, “where the desirability of goods increases as their price increases”. Added to this is “the bandwagon effect”, says Andjelic.
“I feel very fortunate for this moment,” she said. “Costs of living are increasing and luxury goods are more expensive. We make a quality product but it’s not at that super-high price point. It lasts, it’s stylish and it’s our moment to capitalise on customers who are looking for alternatives.”
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