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Chanel, Hermès, Louis Vuitton, and The Row Grapple with Price, Prestige, and Loyalty.
Trends
23 July, 2025
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Luxury handbags have long been symbols of wealth, aspiration, and taste. But in recent years, iconic labels such as Chanel, Hermes, and Louis Vuitton have implemented steep price increases on their most coveted items. This article examines the forces driving these hikes, the consumer response, and the broader strategic implications for the industry. With real case studies and performance data, we explore whether these brands are enhancing exclusivity or risking alienation.
Luxury brands haven’t been immune to global inflation, but beyond headline CPI, a more granular breakdown reveals the key cost drivers. Between 2021 and 2025, luxury manufacturers faced rising costs in several categories:
Calfskin leather, lambskin, exotic hides, and precious metals used in closures and hardware saw price increases of 20-35%. Disruptions to livestock supply chains due to the 2022-2023 European drought, outbreaks of foot-and-mouth disease in South America, and higher energy prices from the Ukraine war strained global leather supply. Gold prices also rose by ~17% from 2021 to 2024, adding cost to hardware and finishes.
European workshops experienced skilled labour shortages post-COVID, particularly in Italy and France. ILO data reports artisan wage inflation at 8-12% annually between 2021 and 2024, as demand for specialised craftsmanship outpaced supply.
Logistics: Global freight rates surged 3-4x during 2021-2022 due to port congestion and container shortages, and although they stabilised in 2024, costs for last-mile delivery, warehouse automation, and fuel remained elevated.
Sustainability regulations and ESG pressure have pushed brands to invest more in material traceability and certifications (e.g. LWG-certified leather, GRS tags). Implementation of DPPs (Digital Product Passports) and enhanced supplier audits in the EU added 3-5% to unit costs across the product lifecycle.
Luxury brands haven’t been immune to global inflation. Across 2023-2025, prices for raw materials, leather, and labor surged, prompting spreads of 5-10% retail price increases by Hermes, Dior, Gucci, and Cartier to preserve margins.
The luxury sector's pricing policies have been heavily influenced by a shifting global trade landscape. The U.S. administration’s decision in April 2025 to impose a 10% baseline tariff on European luxury leather goods - and up to 31% on Swiss imports - was rooted in broader protectionist policies. These were aimed at addressing the persistent trade imbalance with the EU and promoting domestic production.
At the same time, the EU’s rollout of Carbon Border Adjustment Mechanisms (CBAM) contributed to escalating transatlantic trade tensions. These mechanisms, which tax imports based on their carbon emissions, have drawn criticism from U.S. trade representatives who see them as veiled protectionism. As a result, retaliatory tariffs have hit European-made luxury items, particularly bags and accessories.
The consequences are clear: luxury brands must either absorb the additional costs or pass them onto consumers in key markets like the U.S. - prompting sharp, targeted price increases. This confluence of trade policy, sustainability regulation, and inflation has injected lasting volatility into global luxury pricing.
The USD’s strength (≈$1 = €0,88 in Q2 2025) made European luxury comparatively cheap for U.S. customers. To stifle arbitrage, major brands raised EU prices by 8-12%, narrowing U.S. - EU price gaps.
A weakened yen turned Tokyo into a gray-market hotspot. Brands responded with silent price hikes, limited bulk sales, and in-store SKU segmentation to retain domestic loyalty.
Price increases aren’t solely about cost transmission - they signal exclusivity and shift luxury perceptions from 'buyable' to 'coveted.' Bain calls this greedflation,
noting that nearly half of luxury price growth post-pandemic was strategic, not cost-driven.
seem more than enough to cover even the worst-case scenario of 20% tariffs,underscoring sustained pricing power but highlighting limits tied to consumer sentiment.
Emerging buyers - those at the lower end of luxury - are the most price-sensitive. Increases that push bags over psychological thresholds (e.g., a $1.500 bag becoming $1.800) risk alienation.
Post-tariff and “greedflated” pricing have driven younger shoppers toward second‑hand platforms and value-driven brands. As the Financial Times reports, confidence is shaky, and some labels are seeing sales declines.
Chanel has increased prices aggressively to elevate its status and mirror the investment appeal of the Hermes Birkin. However, this strategy has shown diminishing returns. In 2024, the brand reported a ~4% decline in revenue and a sharp 33% drop in operating profit. On the resale market, Chanel’s Classic Flap bag retained just 77% of its retail price - down from 83% in 2019.
Hermes continues to apply its hallmark scarcity strategy - offering Birkin and Kelly bags only to vetted clients with purchase histories. By preserving access and refusing to over-expand distribution, Hermès maintained prestige and pricing power. In 2024, it reported 15% revenue growth and 9% profit growth. Even after a U.S. price hike in 2025, demand remained resilient.
The Row’s Margaux bag, launched with minimal marketing and limited availability, has emerged as a breakout icon in the quiet luxury trend. With a resale value that exceeds retail by 41%, With a resale value that exceeds retail by 41%, it illustrates consumer appetite for understated design paired with strategic scarcity. The brand’s refusal to mass-produce has helped it outperform more aggressively priced competitors on both demand and perceived exclusivity.
Unlike Hermes or The Row, Gucci has leaned on volume and wide availability to drive revenue. However, its price hikes - averaging 26% across popular models like the Marmont - have not been matched with the same resale strength. According to Sehabags, Gucci bags appreciated less in value over the past three years compared to peers, with buyers perceiving less long-term investment appeal.
The resale market has become a critical pressure valve and performance indicator in the luxury pricing ecosystem. As brands push prices higher at retail, many consumers are turning to trusted second-hand platforms such as The RealReal, Vestiaire Collective, and Fashionphile to secure popular models at better value. This shift reflects not only affordability concerns but a growing mindset of luxury as a tradable asset.
According to Rebag’s Clair Report 2024, Hermes retained 100% value on average, with standout pieces like the Sellier Birkin reaching a remarkable 250% resale retention. Chanel and Louis Vuitton also reached the unicorn
threshold (85%+ value retention), while The Row posted a 14% increase year-on-year, driven by the Margaux tote and N/S Park bag. Gucci’s retention remained relatively flat, underscoring consumer perceptions of oversupply and less scarcity.
These resale benchmarks are not just a byproduct - they directly influence brand equity. Brands that dominate the resale charts are increasingly able to justify higher primary prices. Conversely, those lagging risk being perceived as poor long-term investments. Platforms like Fashionphile now integrate real-time buyback offers into customer journeys, further reinforcing the asset logic of handbag purchases.
Resale markets no longer sit on the sidelines; they are now active arbiters of value, shaping pricing strategy, consumer loyalty, and brand longevity.
Luxury's current pricing paradigm is shaped by a convergence of inflation, trade policy, strategic scarcity, and shifting consumer values. Brands such as Chanel and Gucci have tested the upper limits of price elasticity, facing resale declines and middle-class buyer fatigue. Meanwhile, Hermes, The Row, and Louis Vuitton have outperformed by carefully managing supply, reinforcing exclusivity, and aligning price increases with perceived value.
Importantly, the rise of resale as both a behavioural and financial indicator has changed the game. According to Rebag’s Clair Report 2024, brands with high resale retention - Hermes (100%), Goyard (104%), and The Row (73%) - are seen as near-liquid assets, guiding both primary pricing and purchase decisions. Luxury is no longer merely consumed; it is curated, traded, and appraised.
Looking ahead to 2025, the sector faces new challenges and opportunities:
Tariff aftershocks in the U.S. may trigger further regional price recalibrations.
Resale integration could evolve, with more brands launching certified pre-owned platforms (as seen with Gucci Vault and Richemont’s investment in Watchfinder).
Consumer polarisation will deepen: high-end clients will sustain scarcity brands, while aspirational buyers pivot toward entry categories or second-hand.
Creative and investment shifts - with leadership changes at Celine, Givenchy, and Valentino - may usher in a new wave of “must-have” bags, reshaping value trajectories.
In this context, pricing strategy alone is no longer enough. The future of luxury will hinge on balancing cultural capital, resale influence, and consumer trust.
The resale market will continue to influence primary pricing strategies, acting as a real-time referendum on brand desirability, pricing power, and long-term value creation.
Sources: Rebag Clair Report 2024; Financial Times; Bain & Company; The Business of Fashion; WSJ; Vogue Business
Cover image courtesy: Fortune.