Update May 6th, 2020
Surprises aren’t always good… and this one isn’t. We certainly didn’t expect to bring you news of this nature during these times, but here goes…
It appears Louis Vuitton recently increased its prices in the United States! From what we can tell, the hike is about 3% across the board. Louis Vuitton tends to raise prices 4-6% every year, but this time the hike is lower, perhaps resulting in the price rise going largely unnoticed. Of course, on the other hand, maybe we are all a bit distracted by the current crisis.
Just by way of example (and there will be more later in this article), Louis Vuitton’s Cannes previously retailed for $2340 and now shows on the website at $2410. Similarly, the Bleeker Box once sold for $3150 and now demands $3250. Not huge changes, but jumps nevertheless.
Why Do Prices Have to Increase Every Year?
Prices rise to factor in rising costs of raw material, labour and shipping. Moreover, these hikes ensure that your bags stay valuable and coveted. Regular price increases, in fact, help safeguard the resale value for bags in the secondary market and also help stimulate a sense of urgency among customers to make a purchase sooner than later.
To be fair, Louis Vuitton increased prices in China, Japan and the UK late last year according to reports. An increase for the rest of the world was always on the cards for 2020. When the brand increased prices in the U.S. in early March, the pandemic although a problem in Asia, wasn’t an imminent problem in the United States.
It’s worth noting that Louis Vuitton’s production facilities are predominantly in the Covid hotspots of Europe. A price increase strategy fits in well with the impending scarcity situation that the brand is probably gearing up for over the upcoming quarters. Depending on the demand for luxury post-Covid, we could see a supply-demand mis-match and possibly further price increases as well.
At 3%, the current price rise isn’t too significant to hurt, especially for bags that are in the $1000 -2000 range. For example, the price for the ‘Carry It’ bag has gone up by $50 from $1670 to $1720. The ‘Star Trail’ Ankle boots will set you back a $1370 vs the previous tag of $1330.
However, a 3% price increase on the more expensive models, like the ‘Petite Malle’ and the ‘Capucines’ that are priced above $5000 ,could translate into a very noticeable $150 price rise or more. Prices for exotics and limited edition pieces likewise could see a significant price increase in absolute terms.
Again, this strategy could help limit demand at a time when Louis Vuitton’s factories that are located in Europe are closed. Whether other brands adopt a similar strategy or resort to price cuts to stimulate demand and clear stocks remains to be seen.