60 million consumers leave the luxury market: have brands pushed prices too far?

The luxury industry is confronting one of its most uncomfortable questions in years: how far can prices rise before customers begin to walk away? New analysis of the market suggests that approximately 60 million consumers may have exited the luxury market, while prices across some leading brands have increased by between 50% and 70% since 2019. The problem may go beyond a temporary slowdown. It could indicate that parts of the industry have spent too long confusing exclusivity with increasingly higher prices.

LVMH provides a powerful illustration of this changing cycle. The group remains enormously profitable and its earnings are still well above pre-pandemic levels, yet its market valuation has moved considerably below the extraordinary highs reached during the luxury boom. On the other side are companies such as Hermès and Richemont, which are better protected by their exposure to wealthier customers, jewellery, watches and products where genuine scarcity continues to support exceptional pricing.

During the years following the pandemic, many maisons discovered that they could raise prices without destroying demand. Aspirational consumers were prepared to pay more for handbags, shoes and accessories because luxury was experiencing an extraordinary cycle of desire. The problem emerges when prices continue to rise while the product, experience or perceived exclusivity does not improve at the same pace. A customer who could once enter a maison through an €800 or €1,000 product may now face a considerably higher barrier and simply decide to leave the category.

This is creating a growing polarisation of the luxury market. At one end sits the UHNW customer, relatively insensitive to price and prepared to spend extraordinary amounts on high jewellery, watches, exceptional pieces, hospitality and personalised experiences. At the other, millions of aspirational consumers are beginning to question whether certain products still justify their new prices.

The critical question for 2027 will therefore be whether brands should continue pursuing lower volumes and higher prices or rebuild an accessible product ladder capable of bringing some of those consumers back. Cutting prices can damage positioning, but continuing to increase them without proportionally increasing perceived value can destroy demand.

Luxury has always needed to be expensive. But being expensive has never been enough to make something luxury. The difference lies in making customers understand why something deserves to cost substantially more. The maisons capable of rebuilding that relationship between price, desire, product, service, culture and scarcity will be best positioned for the next cycle.

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