A model presents a bag creation by designer Virgil Abloh during a preview show.
Top luxury brands from Chanel to Louis Vuitton have increased prices of some of their most coveted products as they seek to make up for sales lost during weeks of coronavirus lockdowns.
High-end houses have all reported brisk business in South Korea and the key Chinese market, where shops began to reopen in March, partly offsetting a slump in Europe and the United States - where restrictions are only just starting to be lifted.
But with consultancy Bain estimating sales for the $300 billion sector to fall by up to 35% this year, bringing to a crushing halt a decade of spectacular growth, luxury groups are moving quickly to protect margins.
Chanel said on Wednesday it was increasing prices on its iconic handbags and some small leather goods by between 5% and 17% around the world as the pandemic had pushed up the cost of certain raw materials.
Industry powerhouse LVMH's star fashion label Louis Vuitton - which the company said last month was enjoying sales growth in excess of 50% in China in early April - has also been hiking prices of handbags in the United States and Europe.
As an example, its Neverfull MM Monogram bag, which costs $1,500 on its website, was priced at $1,430 at the beginning of May and at $1,320 at the end of October, for an overall increase of nearly 14%.
In China and South Korea, people were queuing outside Chanel stores as soon as rumours of imminent price increases began to spread on social media. Xie Lan, a documentary maker in Beijing, said she had managed to buy a handbag for nearly 30,000 yuan ($4,225) before the price hike.
Analysts said that the strongest brands like Louis Vuitton could be tempted to push prices up given the hit to sales from the virus crisis, which has caused a freeze on international travel and a recession in Europe and the United States.
"It's a strategy to defend margins," said Luca Solca, luxury goods analyst at Bernstein, adding however that not all labels will follow that route because it could trigger a backlash from consumers.
Tod's said on Wednesday it was not planning any significant change to the group's pricing policy for now.
Brands are also grappling with a large amount of unsold stock which they will be reluctant to sell at a big discount in stores, outlets or online out of fear of denting full-price sales and the aura of exclusivity of their goods.
Raising prices also carries risk. In Beijing, Luna Xin, a finance broker, said she was giving up for now on her dream of buying the mid-sized Chanel Classic Flap, whose price had gone up on Thursday by 14.5% to 48,900 yuan, she said. "Last September, it was only 39,000 yuan, and now, only a bit more than half a year later, it costs 10,000 more," Xin said.
Chinese shoppers are key for luxury brands as they accounted for 35% of global luxury spending in 2019. Bain expects their influence on the sector to grow even further in the next few years - making up nearly half of all luxury sales in 2025.
With global travel not expected to return to normal levels for up to two years, Chinese consumers who used to make two-thirds of their luxury purchases abroad will largely be shopping at home, accelerating a trend that was already under way.
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