Although luxury sales growth in China remains in slowdown mode, luxury retailers do not seem to see it as a reason to stop their customary annual price hikes. In a recent article, Beijing Morning Post reported that brands including Cartier, Salvatore Ferragamo, and Chanel are among the starting lineup of this year’s round of price increases.
The three brands have notified their European suppliers about the price adjustments, according to the article. A Ferragamo Shanghai retail staff member confirmed an average rise of 400 yuan (US$64) on select apparel and leather on April 18, while the price increase on shoes ranges from several hundred to 1,000 yuan (US$161), said National Business Daily.
National Business Daily also reported that Cartier’s office had confirmed that since April 21, the majority of product prices have been raised by between 6 and 10 percent in China and other countries.
Meanwhile, Chanel has not yet raised its prices in China; however, its 15 percent price increase in Europe and the United States is the highest global price hike among the three brands. Prices of select bags from Chanel’s Classic Flap collection and the 2.25 collection have reportedly risen 450 euros (US$622), while costs of some bags from from the Le Boy collection have risen 300 euros (US$415). As researcher Xue Shengwen from China Investment Consulting pointed out in the National Business Daily article, Chanel’s price hike was between 20 and 40 percent in 2010, 20 to 30 percent in 2011, and 10 to 15 percent in 2012—a price increase average of more than 15 percent over the past five years.
Price is undoubtedly an important reflection of the products’ luxury status, said Xue; therefore, there is a need to adjust prices periodically to maintain brand positioning and image. The sluggish Chinese luxury market is unlikely to have been hindered by price hikes, which he said should actually stimulate desire instead of hindering sales. Rather, he believes that the government’s anti-corruption campaign has had the biggest impact on slowing sales growth.