What: Luxury brands reduce price increases to 3% in 2025, marking the slowest rise since 2019 as wealthy consumers resist aggressive pricing strategies.

Why it is important: This pricing adjustment signals a fundamental shift in luxury retail dynamics, reflecting the industry's first significant contraction in 15 years and the loss of 50 million consumers, forcing brands to recalibrate their market approach.

Luxury brands are implementing their smallest price increases since 2019, with an average rise of just 3% between January and May 2025. This marked slowdown from the 8% peak in 2022 reflects growing resistance from wealthy consumers and signals a potential return to pre-pandemic pricing patterns. Major brands like Louis Vuitton and Chanel, which had significantly raised prices between 2019 and 2023, are now facing pushback from clients who are increasingly price-conscious despite their wealth. The impact is particularly evident in specific products, such as Louis Vuitton's Speedy bags, which doubled in price since 2019, and Chanel's large flap bag, which increased by more than 80%. This shift comes as the industry grapples with multiple challenges, including US tariff threats and regional conflicts. While some brands like Hermès and Richemont's jewellery brands show resilience, others face significant headwinds, with LVMH expecting a 3% decline in second-quarter sales and Kering forecasting a 13% drop.

IADS Notes: The luxury market's pricing reset in 2025 aligns with broader industry transformations observed throughout 2024-2025. February 2025 data revealed the sector's first significant contraction in 15 years, with a 2% decline to €363 billion and the loss of 50 million consumers over two years. By December 2024, major brands had begun introducing products under $500 to retain middle-class consumers, while April 2025 showed varying impacts across companies, with LVMH reporting a 2% decline while Kering faced a steeper 14% drop. The Chinese market's 18-20% decline in January 2025 particularly influenced this strategic shift, forcing brands to reconsider their pricing approaches across different markets.

Luxury brands ease off on price rises as shoppers push back