The price of luxury is getting even more elusive says Salma Awwad
From suits to handbags to even shoes, the price of designer fashion has increased at monumental rates over the last decade and there are no signs of the pace slowing down. What’s driving the rising prices and is this jump justifiable?
In recent years, prices of luxury fashion products have grown at more than twice the rate of general inflation. Luxury online retailer Net-a-Porter currently hosts over 100 pairs of shoes that are priced well beyond $1,000, not to mention the two pairs of Louboutins sparklers that exceed $6,000.
An Hermès Kelly, the epitome of luxury in iconic designer bags, was sold for $4,800 a decade ago. Now it starts at $7,600 which is an increase of nearly 60 percent. This might seem excessive in comparison to other industries, but in fact, it is quite typical in the luxury fashion industry.
A pair of designer shoes in the $2000 plus range barely existed a decade ago, but now they are a common place. Take the 24 carat gold shoes that were released at the Level Shoe District as an example. The dazzling pair was sold for $2,600.
It is true that raw materials are more expensive and the wages of the private-sector have increased. But have these jumps been drastic enough to justify fast-rising luxury fashion prices?
Perception and desirability play a huge role in the pricing game. The more expensive something is, the more exclusive and, therefore, desirable it becomes and more people are now able to simply pay up.
The number of high-net-worth individuals in the world increased by 9.2 percent in 2012 to 12 million people, with combined total assets of $46.2 trillion, according to a report by Capgemini, a management consultancy.
These are the people that have their private jets fitted with Hermès leather, and purposely invest in items that distinguish them from the aspirational buyer. The question is, how high is high? Is there a limit to what a sane person - billionaire or not - is willing to pay for a pair of shoes?