Luxury fashion has long been synonymous with exclusivity, craftsmanship, and cultural prestige. But in recent years, prices for bags, clothes, and accessories have soared. This has made luxury harder for most people to afford, leaving only the very wealthy as regular buyers.
This transformation has major implications for today's fashion-loving consumers, prompting brands to rethink strategies and adapt to a more cautious market. Here, we unpack why luxury has become so expensive, how fashion houses are responding, and what it means for shoppers now and in the years ahead.
Why Luxury Prices Have Escalated
Over the past decade, the price of many luxury items has skyrocketed far beyond underlying manufacturing costs. Classic handbags from major houses, for instance, have repeatedly increased in price, with some jumping by more than 50-70%.
This isn't merely inflation. Luxury pricing strategies are rooted in what marketers call 'prestige pricing', which means that charging a lot of money for an item makes the brand seem more important.
Brands are deliberately using pricing as a marker of prestige, with the belief that higher prices equate to greater demand and status. In psychological terms, price can be seen as a sign of exclusivity and membership in a certain social group, sometimes more important than the quality of the work or the materials.
While this approach can strengthen desirability, it also carries drawbacks. Often, it leads to fewer sales overall and turns off customers who are more price conscious.
The Rise of the Cautious Consumer
Consumer behaviour has changed as the result of persistent price inflation. Recent research by global consulting firm AlixPartners shows that even wealthy shoppers are becoming more cautious. In some markets, their confidence about spending on luxury items drops significantly. Uncertainty about global economic conditions, political instability, and personal financial security have all factored into how luxury buyers allocate their budgets.
For the segment of consumers historically dubbed 'aspirational shoppers' or those who spent modest amounts on high-end fashion, this shift has been particularly noticeable. Several reports estimate that many of them have exited the luxury segment altogether as price barriers have risen.
Younger consumers, especially Gen Z and Millennials, are also re-evaluating the role of physical luxury items in their lives. They favour experiences and ethically aligned brands over traditional status goods.
How Luxury Houses Are Responding
Faced with demand pressure, some of the most iconic fashion houses have begun to recalibrate their offerings rather than purely chase premium price points.
Expanding Lower-Tier Luxury
Brands like Dior and Chanel — once infamous for aggressive price increases on core handbags — are adding more accessible products to their line-ups. Dior, for instance, has boosted the proportion of leather goods under €4,000 (£3,400), while Chanel has similarly increased its lower price tier within handbags and accessories. These new entry points don't undercut exclusivity so much as widen the funnel, giving younger or aspirational buyers a taste of the brand before committing to a major purchase.
Diversifying Product Categories
Many houses are leaning on 'entry-level luxury' such as scarves, belts, small leather goods, and accessories in the under £1,000 range. These categories often retain high quality, but they don't have the psychological barrier of six-figure prices. Not only does this help brands maintain relevance, it also allows aspirational consumers to participate in luxury culture without overstretching their budgets.
Moderating Price Hikes
Across the luxury sector, the pace of price increases has slowed. According to a research by CNA Luxury, prices increased in 2025 at the slowest rate in several years as brands responded to pushback from buyers. Maintaining volume through gradual increases strikes a good balance between being profit-driven and being sensitive to market conditions.
The Boom of Resale and Alternative Markets
The huge growth of the second-hand luxury market is another notable effect of price increases. Reselling platforms have grown a lot as people look for used luxury brands that are still in good condition without the premium price. As fans and thrifty shoppers move through the market, even some vintage pieces are going up in value.
'Dupe culture' or affordable alternatives that mimic designer aesthetics has also surged. While not directly substituting luxury craftsmanship, these products appeal to style-driven consumers who prioritise look over brand prestige, especially amid economic constraint.
Smarter Ways to Spend
For the fashion enthusiasts today, here are useful insights to keep in mind:
1. Do your price research
Prices for iconic items can vary dramatically between regions and seasons. Monitoring historical pricing and resale values helps indicate when a piece is legitimately worthwhile as an investment versus overpriced.
2. Consider entry-level luxury
Smaller items, from card holders to silk scarves, can be an accessible gateway into high-end brands without the commitment of a full-price bag or coat.
3. Explore resale markets
Certified resale channels provide authenticated luxury at lower price points and can even offer vintage gems that tell a story beyond just the label.
4. Balance value and desire
Remember that price isn't a proxy for personal value. Choose pieces that genuinely fit your lifestyle and long-term wearability, rather than buying simply for status.
5. Stay informed about trends
The luxury landscape evolves rapidly, and brands are increasingly responsive to consumer sentiment. Awareness of pricing trends and brand strategies leads to smarter shopping choices.
A New Luxury Mindset
The era of unchecked luxury price inflation appears to be moderating as brands adapt to a more cautious and discerning customer base. Although exclusivity is still a big part of what makes luxury appealing, fashion houses are starting to realise that the key to long-term success is reaching out to a wider audience with more accessible pricing points and an increased selection of products.
For consumers, this shift opens opportunities to enjoy luxury fashion in new ways — from accessible accessories to thoughtfully curated resale purchases — without sacrificing style or personal value. The true cost of luxury today is not just what's on the tag, but how it aligns with your own aspirations and lifestyle.
