We decided to take on what might very well be the Achilles heel of the luxury industry: the price tag on some of its articles. But what happens when we realize that in the end, this industry, and what makes it real and subsistent, is in fact, our own doing?
Lately, I’ve been thinking and writing a lot about fine lines. I’m a curious person and find myself particularly intrigued by the edge of one’s limits, by the way we dance between the demarcations of our own reality, depending on the topic and will to do so. In my little black book – calm down, I’m only referring to my faithful Moleskine in which I note down everything I find worthy of analogical recording – I lose track of how many lines I navigate constantly: between good taste and faux-pas, between the limits of gender in beauty and lack thereof… between what we chose to accept as irreducibly absolute and what can be questioned. Fashion, in the completeness of its circular morphology, is filled with similar questions that arise here and there, making it, in lack of a better adjective, the most beautiful paradox – one that is capable of shaking the beliefs of even its most devoted enthusiasts. For example: the price of luxury goods and their evolution, in the sense (or nonsense) that some handbags cost as much as an apartment and some t-shirts are more expensive than a motorcycle. Now that we have your attention, allow me to start by saying that, in general, the market and the economy are analytical mechanisms, sure, but they’re also human products full of failures and fluctuations (take my word as someone with a bachelor’s in economics, if it helps). That being said, these words of mine are in no way pretending to carry the entitlement that would be promising answers to questions we don’t even know how to ask. When it comes to Fashion, this is perhaps one of the most sensitive and complex debates there are since the industry’s inception, and one we will honor the best way we know how: by raising relevant questions, and by dedicating it our time and attention. You can take Vogue’s word for that.
The constant change in the world of Fashion is perhaps only comparable to the omnipresence of its self-criticism, to the realization of the (many) flaws in the system that operates it. Very humanly so, we frequently cave into the temptation of contextualizing what we live through today in a highly reductive manner, without considering what might have motivated the scenario that is now at play. “Even before the crisis of the pandemic, several specialists had already noted how, generally speaking, the system was broken and not really being able to respond to both the business goals and the ones related to sustainability or social impact. In a way, there were already many critics about how the system didn’t make any sense. During the pandemic we were forced to stay home and think about what was wrong and to what degree we could change our practices. It was a particularly intense period of debate and discussion, there were a lot of ideas that came about and motivated a reflection about the sense of it all and the direction we are going.” These are the words of Franck Delpal, PhD in Economics, Professor and part of the board of directors at the Institut Français de la Mode, in Paris. Without meaning to hurt susceptibilities, I thought there’s one fundamental question that should open the conversation at hand: does it make sense that the price of certain items, and of luxury in particular, has escalated as much as we verify today? The answer I received came down to something like: “No, but…” And that “but” is enough to fuel any worthwhile discussion.
The next logical question – and let it be underlined that the aforementioned adjective, though not that widely employed in this particular issue, denotes how, amidst the nonsense, there’s always some sort of rationality (call it chaos theory or random chance and let’s move on shall we) – would then be: What’s the motor of all this? Is this apparently infinite inflation a product of the laws of the market alone? Franck Delpal explains: “There are two elements at play here. The first one has to do with the demand side, where we can see an increase in the sensibility when it comes to the value for money ratio, which normally is accentuated in moments of crisis. Long story short, we’re talking about the phenomena where consumers question themselves ‘What exactly am I paying for? Is it for a brand, for just the product, or are there other factors that justify this level of spending?’ Today we clearly see the influence that psychological perspective has when it comes to the perception of the barriers that define luxury. Still on the demand side, the growing detachment between what we call more mature markets (the ones that are more affected by these moments of economic depression) and the emergent ones, also feeds into this type of phenomenon; the price sensitivity, for instance, is much more relevant in occidental markets rather than in emergent ones, where the willingness to pay is much stronger. These fundamental differences translate into very distinctive expectations regarding several countries’ attitudes towards the future of consumption levels. On the supply side, there are also some explanations to be found. Despite the augmentation in the prices of raw materials and wage rates, this increase does not accompany the crescendo in the price of certain product categories such as shoes or bags. The sector’s gravity center is shifting, as it is observable through the dominance of Asia in what represents more than half the luxury market today.”
Surprisingly so (or not), the conclusion we reach throughout this first approach is that geography is incredibly important to the analysis of the subject. We’re not merely addressing the differences between markets or countries, or the positioning amongst their consumers; we’re dealing with worlds completely far apart. From an economic perspective, between the two types of markets mentioned above, the points of contact seem too few for the upholding of the same measure or ideal of what luxury – or its price tag – should be. The exclusivity factor that has always defined the DNA of the sector, has made sure to guarantee that one can count with one hand the number of players in this circle, a fact that sets fire to any argument without many ways out: the brands are the same, the value of the product is the same, but the willingness at play is antagonistic. Somewhere between the jet lag and the time change, Fashion seems to have forgotten to manage expectations, especially those of an occidental world that still isn’t able to keep up with the boom of growth on the other side of the globe. “The consumers of the more mature markets, such as in Europe or the US, for example, are more and more inclined to buy items at a discounted price or those of premium brands, alongside buying second-hand, in order to fight their very own spending limitations. This type of behavior is the product of knowledge and research, which are acquired throughout the search of balance and of a more favorable trade-off, Franck Delpal adds. Meaning, prices increase depending on what this significant fraction of the clientele manages to absorb, but the strategy is maintained as “global” although, when it comes down to it, it is based on the premise of a tarnished representation of occidental consumption.
In the name of this piece’s clarity, and as to honor its highly economic agenda, let’s talk numbers: over the last few years, certain categories of products, usually more resistant to the impact of economic crisis due to how they’re seen as “investments”, such is the case for small leather goods, jewelry, shoes or bags, have seen an increment in price of 3 to 5% roughly twice a year. This crescendo, according to the platform Statista, has led to an almost uninterrupted appreciation of the sector up to its estimated value of 281 billion euros in 2019. In pre-apocalypse times (meaning, before the pandemic), material goods were paired with the search for experiences, for a more sentimental side to what it meant to consume luxury in 2020. However, when COVID-19 bluntly alerted us to the fragility of the human condition, that experimental fraction of consumption crumbled down, largely due to the pure impossibility of physically going to any store, commercial space or event under the sun. Delpal then goes on to establish a fundamental distinction between the crisis we’re now going through and the financial crash of 2008. “It’s interesting to think how in the last decade, after the crisis of 2008, luxury brands focused especially on communicating their values, legacy and DNA, in addition to the tangible value of their products. Nowadays, due to the psychological value we discussed before and how it is related to the increase in price sensitivity, consumers now nurture particular interest in fashion stories as intangible contact points with the sector. Some examples of that are the collabs between brands, with artists or other personalities, where several digital tools are employed in order to offer an unexpected and desirable experience, associated with a strong, high-quality product. The major difference between 2008 and today is that the response back then used to come from the brand and its storytelling, while today this response focuses on the product and the community that surrounds it.”
Digital has saved us from the complete interruption of what could be called the more conceptual side of Fashion – runway shows became into short films, collections turned into capsules, audiences became +1s on the codes of algorithms – but, in the last year, the uncertainty that still threatens the last drop of hope we have of a new normal, has overflown into the expectations of all and every creative industry. Luxury, Fashion’s black sheep (clearly defined as such due to its Givenchy, Chanel and Margiela wardrobe, of course), is still very much not on board with the democratization started by the screens of the masses. With no possibilities of a (natural?) selection during events and physical experiences, it became imperative that other mechanisms would guarantee the upkeep of that exclusivity that defined the sector. “It’s a somewhat traditional move amongst luxury brands, that combines both the state of the market and the performance of the existing clientele, integrating the ritual of sales that is regarded as nearly sacred. This mindset is not exactly compatible with this type of digital distribution, because there is no touch, no clear communication of the brand’s history, of everything that is to be found beyond the quality that is constantly being presented. Therefore, the more barriers there are between the product and the consumer, the bigger the value that is possible to be attributed to anything tangible. When we’re forced to go make our way into a store, talk to a sales associate, know more about the product… that interaction creates value and builds anticipation regarding its intrinsic exclusivity. The fundamental question at this point is about finding ways to communicate that value at a time when we’re all shopping online, and there are essentially two ways of doing so: by dropping limited collections, where the small reaction window of time during the act of sale drives up the desirability of the product; and through the most primordial and determinant barrier to maintain exclusivity: the increase in price”, Franck Delpal points out.
Just like the iconic cult film Mean Girls (2004) reference, the luxury sector is set in declaring loud and clear that “You can’t sit with us”. We’re before a side of Fashion that has no intention – not until now, at least – of letting its guard down when it comes to its sky-rocketing values. Whether for the love of savoir-faire, for the search of what money can’t buy, or out of plain and simple ostentation, the biggest perpetrators of this system are no one other but its consumers themselves, confirming the aforementioned paradox we discussed at the beginning of this article. We’re very quick to blame or criticize the broken system we insert ourselves in, but when looking for answers for the nonsense we believe to be in the presence of, we (somewhat purposely) forget the mea culpa that our own consumption patterns also demand. We still want to step into the circle, to have a seat at the table, to be able to consume and enjoy that exclusivity, but Franck Delpal defends that there’s a limit, even for nonsense: “There’s a limit to what is perceived as acceptable, and that ceiling is highly personal and influenced by the most various restrictions, but it always takes us back to the same latent question: ‘What am I paying for?’ The price that comes with a certain product must be compliant with the value it carries in the eyes of the consumer, and this is a notion that brands must be very attentive to, especially within the strategy to increase prices. Although certain people might have more of a margin when it comes to willingness to pay, if the asked price goes too far, that can permanently damage the image and positioning of the brand for those consumers, resulting in a total loss of credibility. There must always be some psychological reading alongside the economic analysis.” Nonsense or not, the regenerative capability of the luxury and Fashion sectors makes them a constant subject of interest in an economic perspective as well as, simultaneously, the perfect fuel for the liveliest of discussions amongst those who admire them as much as they question them. In a recent article published on the platform Business of Fashion, I read a quote in which I find some consolation in the middle of all these questions whose answers lay inside each and every one of us: “This sector is beautiful in its irrationality.” Voilà.
Translated from the original, as part of Vogue Portugal's Nonsense Issue, published in july 2021.