Versace is the latest luxury brand to increase prices
Consumers are somewhat used to seeing price increases at luxury brands like Chanel, Rolex, Cartier, Bottega Veneta and Louis Vuitton over the past three years, where items like handbags and shoes are seeing new elevated costings. These price increases, however, are nudging other companies to do the same.
Versace is one such brand. At Goldman Sachs’ 29th Retail Conference held last week, John Idol, Chaiman and CEO of Capri Holdings, the Versace owner, said: “We’ve made a decision recently to take Versace up a further level from where it is today. We think we have the right product. We think we have the right brand heat, and we know that many of our competitors are at substantially higher prices than us.”
Versace’s rise in prices is not reflected by inflation, but by matching its luxury peers. While the Milan-based luxury house does not quite have the heritage of Louis Vuitton or Prada – it was founded in the late seventies by Gianni Versace – it has enough legacy, brand strength and product quality to play in the same luxury pool. And here retail prices contintue to elevate to ever-rising peaks.
Capri is not just increasing prices at its Versace, but also at Jimmy Choo and contemporary brand Michael Kors. “There will be more price increases for both Michael Kors and Jimmy Choo next year as well as we continue to elevate and get the positioning right for both of those brands,” Idol stated.
At the Goldman Sachs Retail Conference in 2020, Capri Holdings said it aimed to reach two billion dollars in sales at Versace, expanding its accessories and shoes to 60 percent of its revenue and increase global retail to 300 stores. Increasing consumer prices will take it one step closer to reaching its revenue goals.
Global supply chains in flux
As the cost of materials, shipping, production and fuel got more expensive during the pandemic, so did retail prices. Shoppers to date have not seemed to mind, with most luxury brands posting healthy margins and revenue growth in the first half of 2022.
In February, Berstein, a wealth management and research company that tracks luxury prices, estimated average increases between 6 percent and 7 percent, while others estimated up to 15 percent for items like higher priced bags.
On Versace’s website, an alligator bag retails for 18,000 euros, and is the most expensive item in its bag offering. Next is a Fendace bag from its Fendi collaboration, which retails for 3,200 euros. On second-hand market places like the RealReal, Versace bags sell for approximately 25 percent below retail price, meaning the resale market is keeping prices buoyant.
Commenting on pre-owned luxury Mr Idol said: “Interestingly enough, the resale market has I think created a comfort level with people in the luxury world that they can not only purchase and enjoy but they see value in the ability to be able to resell product.”