Have Rising Luxury Goods Prices Finally Hit The Ceiling?

If it seems to you that the prices for hot luxury items like Chanel handbags and Christian Louboutin shoes are going up at a dizzying rate, you are not mistaken. The Wall Street Journal reports that prices for luxury brand items from labels like Prada, Louis Vuitton and Cartier have risen by as much as 70% in the last five years alone, and customers, many of who were already willing to lay out a couple of thousand dollars for a handbag, are starting to balk, or just buy fewer things. The Louis Vuitton 'Montaigne' bag pictured above is now $2,410, which seems high for a non-leather bag even from LV. According to WSJ, the price of a classic quilted Chanel bag rose 70% to $4,900 since 2009, and coveted brands like Jimmy Choo have jacked up prices by 50% even on basic styles. The brand representatives claim that rising costs of labor and materials have caused the increases, but experts counter that such factors shouldn't count for more than a 5% increase over the time period. The Journal's theory is that as less expensive but aspirational brands like Michael Kors and Coach (which is one of the most popular import labels in China) gain ground, the high-end luxury brands want to distinguish themselves as offering a finer, and therefore more expensive, product. The thinking is that if customers will pay it, they can charge it, but the Journal is telling us that well-heeled customers who are used to what most other folks would consider extravagant spending are fed up. In fact, the wildly inflated prices are showing up on balance sheets as growth, but are hiding the fact that unit sales are dropping as the possibility of having one of those status items seem ever out of reach.

Now, growth is slowing, so what does this mean for luxury prices in the future? Will they level off, or even drop? It is unlikely that a brand like Chanel will lower the overall prices of its basic products, but perhaps they will reconsider when pricing new items. Luxury prices overall may stabilize for the next few seasons, because as enthusiastic as the 1% is about buying luxury labels, they are also quick to turn on a brand if they feel that they are being gouged at the register. As emerging markets overseas continue to present themselves, however, these brands may not have to trade too far down to hit projections, they can just expand globally. There may not be much of an end in sight.

Soaring Luxury-Goods Prices Test Wealthy's Will to Pay (Wall Street Journal)


Nicolas Ghesquière Is Officially Your New Louis Vuitton Designer

NicolasGhesquiereLVofficial-AIn an announcement that surprised exactly nobody, Louis Vuitton officially named former Balenciaga designer Nicolas Ghesquière (pictured left) as Artistic Director of Women's Collections starting right now. He succeeds Marc Jacobs who bowed out in September with a dramatic runway extravaganza. Ghesquière had been rumored for the job from the time of his surprising and not particularly amicable exit from Balenciaga about a year ago, although many fashion pundits were rooting for him to go solo and start his own signature label (which he may still be able to do). Once Jacobs confirmed the end of his tenure, it was practically a given among insiders that Ghesquière would step in. The designer will take the design reins of a company roughly 20 times as large (and possibly even more bureaucratic) than the one he left, not that anyone thinks he may not be up to the task. His history of creating covetable accessories will also serve him well at Vuitton, which is said to be looking to upgrade its fashion image from a logo-driven accessory label to that of a more rarefied luxury brand in the mold of Hermès. Ghesquière's first collection will be shown in March. Let's hope he continues Jacobs' habit of live-streaming the event so we can all get up before the crack of dawn to get a glimpse of the next phase of Louis Vuitton.

Louis Vuitton Confirms Nicolas Ghesquière Hire (WWD)


Louis Vuitton Taking Its Own Corner Of Saks' Giant Shoe Floor

It's official now. There is no shoe department that is too big or too extensive for New York. Saks Fifth Avenue's 10022-SHOE department opened just a couple of years ago on the store's entire eighth floor to much fanfare, and now it is already being further expanded with another coup for the flagship: Louis Vuitton's first in-store shoe salon. The Peter Marino designed department will open this September on the Fifth Avenue side of the floor, and is expected to be the first of many such installations in other stores that contain Vuitton shops (Hello Bloomingdale's, Neiman Marcus, start clearing some space). Like the other two Vuitton shops in Saks for accessories and women's apparel, the shop will be directly operated by the brand itself, as it does for all of its in-store shops.

Vuitton is on something of an in-store shop expansion kick itself at the moment with a new boutique in Macy's in the works as part of that store's immense renovation of the famous Herald Square flagship. Visitors to Bloomingdale's main floor will notice that a big chunk of the men's department along the store's Third Avenue wall has been closed off for another Vuitton department that is under construction —presumably a separate men's accessories shop.

As for Saks, it also signals an increasing hospitality for the kind of leased in-store shop arrangement that forced Prada's women's apparel and accessories out of Barneys last year. Gucci recently took over much its selling space in Saks, and several other accessory departments on the main floor such as Dior and Fendi (and, presumably now, Prada) are also vendor-operated. Barneys and Bergdorf Goodman, traditionally have rejected such arrangements as an infringement on the stores' merchandising integrity, and given the option, have both chosen not to carry or drop brands like Vuitton that insist on such arrangements. It will be interesting to see how that affects the future distribution of luxury megabrands in the city, especially with Nordstrom on the way, looking for major labels to compete with.

Louis Vuitton to Unveil Shoe Salon at Saks Fifth Avenue (WWD)