It is to no surprise that the luxury fashion industry is in turmoil as customers aren’t spending as much as they used to. However, at the same time, many find it peculiar to see handbags that cost US$5,000 (RM22,000) and above that are not made out of any special type of leather.
Mid-tier brands like Coach have been welcoming former the now alienated aspirational customers of the conventional luxury brands in the last half decade. Luxury fashion YouTubers have mentioned several times that the quality has allegedly been reduced significantly, and the prices are increasing significantly.
Luxury fashion brands cutting profit margins
In December 2024, Reuters mentioned that Europe’s top fashion houses will reluctantly reduce high profit margins in 2025. LVMH, Kering, and Chanel increased prices during the pandemic, but cooling demand from Chinese consumers is forcing a rethink.
Despite fears of diluting brand value, cutting prices seems inevitable. Chinese luxury spending may never fully recover, impacting the industry’s profitability.
Versace releasing new pieces at significantly lower prices
Popular luxury YouTuber, Cassie Thorpe mentions that Versace, the famous Italian luxury fashion house has reduced the prices of their bags. They have released new options at a much more attainable price point, which is around US$1,000 (RM4,400).
For the most part, these brands may probably continue on quietly releasing cheaper items in the next few months or years. The increased price has allegedly gotten customers uncomfortable with purchasing these items as the resale value for most of these brands are not as concrete as they’d like to think.
Are designer bags now a poor investment choice?
It’s getting to the point that even Chanel bags are no longer seen as a “profitable” investment as some influencers liked to call it. Second hand prices of their items appear to be dropping and they’re just not being sold on the second hand market for a higher price than the original list price like before.
Fashion items that aren’t in extremely limited production generally aren’t good investment pieces, as bags are meant to be used and will show wear and tear. Previously, drastic price increases allowed people to profit from these bags. If there’s a price reduction, for obvious reasons, the prices on the secondary market will also drop.
