Luxury Fashion Prices Going Up: Time to Invest?

The cost of living has been a recurrent conversation across town halls, social media, political campaigns, and financial discussions. Everything from the housing shortage that started with the 2008 global financial crisis to the international conflicts and their economic consequences are relevant matters of these conversations. We speak about the cost of housing, the cost of groceries, and the cost of fashion is not left out of these conversations.

When we talk about the cost of living throughout the years, it is helpful to mention the price of a few commodities to illustrate more accurately how inflation affects everyday prices: a gallon of milk being $4.00 instead of $3.70 or a banana now costing $0.40 when it was $0.30. 

However, the price of luxury fashion goods has been a prevalent subject when we have conversations about high costs and fashion. Luxury fashion goods elevate their prices as a reflection of a number of factors that are affecting the country that produces the goods and its sociopolitical context. Let’s unravel the factors pushing the prices of luxury fashion to go up so quickly and whether luxury fashion goods should be treated as commodities to invest in.

Why are the costs of luxury fashion rising?

Inflation is the most important factor behind the rising prices of luxury fashion. Inflation hit the entire world in the most advanced economies after the pandemic, when a lot of manufacturing, shipping, and labor was paused and delayed. Snarled supply chains, labor shortages, and an increasing demand for goods are some of the factors that are driving the costs of goods to rise. A luxury fashion good —a handbag, for instance, is a result of a complicated equation where each of the factors has been affected by inflation: The leather, the craftsmanship, the hardware, the retail spaces, the labor, and the shipping. When a handbag’s price goes up, it reacts to the change of prices to an entire chain of actions that must happen to have a handbag. 

Other components are making inflation escalate even further. The invasion of Russia in Ukraine led to a substantial increase in the prices of food and oil around the world, even in countries that are not directly associated with the conflict. As the prices of oil go up, the transportation of these goods in the production and distribution process becomes more expensive. 

Additionally, the increase in demand makes these items more desirable and gives fashion houses the power to price their products at their convenience. Although the increase in prices is usually a reflection of inflation factors, it is very common to see fashion houses push their prices higher than the inflation rate because most of them have not seen a decline in sales as a direct response to the elevation of their prices.

The prices of luxury fashion have been skyrocketing in the last few years, with an increase in prices of about 25% since 2019. 

A Chanel Classic flap bag is now more than doubled the price it retailed for in 2016. 

Prices are too high?

The whole premise of luxury fashion runs around the idea that these items are not meant to be available for the mass consumer. Only a limited number of units are available in the market, and they are produced in an artisanal and careful way that elevates the quality and status of the product and the brand it represents. Purchasing a luxury bag is purchasing a lifestyle these fashion houses are selling through their storytelling across their fashion shows, their retail spaces, their brand ambassadors, and their online media presence. In an aspirational manner where it seems as though walking on the streets with a Kelly puts you on a pedestal on your way to work. 

The customers of these brands are eager to be part of this story at literally whatever price it costs. It’s not just about owning a Chanel flap bag; it is about feeling like an empress on Park Avenue walking down the street feeling empowered and elevated with the sophistication and elegance that the legacy of the French fashion house carries. 

This element of storytelling is the power of marketing that fashion houses are truly investing in, because it’s what makes their products stay current and relevant to the current consumers and to the new generations of consumers. It is not an arbitrary decision that Dior selected Rihanna as a brand ambassador for the fragrance J’adore, or the muse selection that Donatella Versace has every year at the Met Gala for them to wear her work: Kylie Jenner, Anne Hathaway, Eiza Gonzales, Maluma, Blake Lively. The list of A-list celebrities is rich and diverse in industries and backgrounds, because that’s how the Italian brand remains relevant and appealing to the consumers. The beauty of the fashion is almost as important as the relevance and prestige that the name of the brand carries.

Is it a good idea to invest in Luxury fashion goods? 

Luxury fashion goods prices tend to be more predictable than those of digital assets or stocks, for instance. Historically, the pattern has been that the prices of luxury fashion goods go up year after year, and the Dior bag you buy today will have a bigger value in 5 to 10 years. 

But it is important to consider what kind of bag you decide to invest in, as there are certain bags whose value goes down because their design is not timeless, or the value or relevance of the brand fades away. Fashion houses with an established name and history, such as Dior, Louis Vuitton, Chanel, and Hermés, are usually safer investments because they are recognized by a wider audience and, therefore, more likely to be sold at an inflated price. Additionally, these established fashion houses are more likely to preserve their prestige and name recognition amidst a fast-pacing fashion industry where brands find themselves in the need to shut down their business if they can’t keep up with the needs and desires of the customer. 

There are certain fashion pieces that become more valuable with time because they were part of a successful and impactful capsule collection. Some examples include the collaboration between Supreme and Louis Vuitton, which was one of the very first efforts to blend streetwear and high fashion, or the Fendace Collection, bringing Fendi and Versace creative minds together in a super sophisticated and splendid collection that brought together two rich Italian fashion houses together (both of which have several decades of carrying an established reputation). Not all capsule collections become necessarily more valuable monetarily with time, as many of them may be a reflection of a fad that may be hard to understand in the near future.

Another great example of pieces that become investment goods are those that carry a strong name behind them. We are living in a fashion industry where the fashion designer is as relevant as the fashion they design and these figures become beloved, followed, and celebrated by their consumers. This happened with Virgil Abloh, the American fashion designer and creative mastermind behind Off-White, Serena Williams’ tutu, and Louis Vuitton’s menswear ready-to-wear lines from 2018 until 2021 when he passed away due to cardiac angiosarcoma, a rare type of cancer. Abloh was such a beloved and admired person in the fashion industry, that his work is remembered with nostalgia and care, making the work that was made under his reign go for up to $2,000. 

Other names such as Alexander McQueen, Oscar de la Renta, and Yves Saint Laurent are now part of fashion history, and after the designers passed away, the work that they produced under their creative direction became more valuable for collectors and fashion lovers. These fashion houses still operate with new designers leading the creative direction of the brand. However, there is an element of appreciation and care in owning a piece designed under the creative direction of Yves Saint Laurent himself or Alexander McQueen himself. These kind of investments would be targeted to a more niche customer who follows these moments in fashion.

Most popular fashion investments

The following bags have been referred to as popular fashion investments across fashion blogs and social media platforms due to the history of the prices going up consistently and the ability of the brands to keep their name relevant and current.

Chanel flap bag

Hermes Birkin

Gucci Horsebit

Dior Saddle

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