Luxury Goods Are Going on Sale. Here’s Why

Luxury Losses

After splurging during and following the pandemic, Americans have stopped treating themselves quite so much.

Luxury goods spending for all income groups has tumbled sharply, per Bank of America credit card data reviewed by the Wall Street Journal.

With sales down, luxury brands are taking a perhaps surprising step for the sector: bringing prices down.

Splendor on Sale

These companies aren’t just doling out promotional discounts. Luxury brands like Burberry (BURBY) and Yves Saint Laurent (PPRUY), for example, have permanently slashed the price tag of high-end handbags. Handbags account for nearly half (45%) of an average luxury label’s revenue, according to UBS data cited by WSJ.

But it’s not just the ultrawealthy who shop at luxury brands. It’s the middle class, too, and they’re increasingly getting priced out. Now price cuts are an attempt to win these customers back.

Luxury companies can’t always afford to cut prices to boost sales. A key part of these brands’ appeal is their perceived value and exclusivity. Even so, brands can’t rely on one type of shopper alone. For consumers looking for luxury, this is good news.

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