Gucci has increased some of their bags’ prices by up to 9%, following other luxury fashion brands, like Chanel and Louis Vuitton, in their attempt to recover their COVID-19 losses and in a bet that their brands will still lure the wealthy.
Investment management, Jefferies International, reported on Friday an increase for two of Gucci’s most known bags, the $2,290 Dionysus and $2,980 Zumi. Both bags’ prices increased between 5 per cent and 9 per cent in May and June in Italy, the U.K. and China.A spokesperson for Gucci’s owner Kering refused to comment. Jefferies luxury analyst, Flavio Careda, stated that the change in the bags’ prices would narrow the gap between Europe and China, which are higher the latter. However, even after the increase, the prices in euros of both bags – Dionysus and Zumi – were still 28 per cent and 23 per cent respectively higher in China compared to Italy. Careda, who in May changed his rating on Kering from “hold” to “buy”, said “We are unsurprised that Gucci, another brand with strong brand heat, is following suit with opportunistic price increases in an attempt to mitigate revenue contraction”. Chanel in May also increased the prices of two of its most well-known bags by between 5 per cent and 17 per cent to reflect higher raw materials costs because of the supply chain disruption following the COVID-19 crisis. Chanel has confirmed to the media outlet Jiemian Fashion that “they will adhere to the global pricing alignment to get rid of distinct price variations between different markets.” “These adjustments are made while ensuring that we avoid excessive price differentials between countries, in line with our commitments regarding price harmonisation,” the brand said at the time. Louis Vuitton bags’ online prices also increased in Europe and the United States as reported by Reteurs. For China, the prices increased for third time this year and many customers are disappointed by the constant price changes.
Jing Daily, website that publishes news and reports of the luxury market in China, comments that “While China has shown early signals of economic recovery — and high-net-worth consumers have stayed resilient despite the ongoing pandemic — regional price increases don’t make for a well-considered strategy. Meanwhile, despite the huge buying power of local consumers, increasing prices either too frequently or by a large margin will potentially jeopardize customer loyalty.”
It is being reported that other luxury houses, like Dior, will follow.