Luxury goods sellers are reportedly facing a tough market after raising their prices significantly after the pandemic.
Between 35% and 40% of luxury goods were sold at a discount in 2025, often at outlet stores, and luxury brands’ average operating profit margins dropped to the lowest level since 2009, at 15% to 16%, the Financial Times reported Thursday (Jan. 1), citing figures from a study by consultancy Bain & Company and Italian luxury goods industry association Altagamma.
The report attributed these declines to consumers’ rejection of rising prices rather than a cutback in spending.
“When consumers step back from paying full price, it is less a sign of frugality and more a clear message that the price-to-value equation in luxury has drifted out of balance,” Claudia D’Arpizio, global head of luxury at Bain, told the FT.
During a post-pandemic sales boom in the luxury sector, brands increased their prices to a level that is 1.5 to 1.7 times higher than 2019, D’Arpizio said.
An unnamed buyer at a European department store told the FT that customers are shifting to newer brands and designers “where the fashion content is high but the price point is lower than the big luxury names.”
Alex Angelchik, whose Newtimes Group purchased the Robert Talbott brand in 2021 and relaunched it in 2023, told PYMNTS in November that younger luxury consumers have options, including resale, and they’re asking harder questions about price versus product.
“The blazer that I could buy from a top Italian luxury brand five years ago perhaps was $3,000, and today it’s $7,000,” Angelchik said. “And to me, it makes no economic sense whatsoever.”
At Robert Talbott, Angelchik rebuilt the product architecture around a clear value promise: Quality American luxury fashion for men at the entry to high-luxury pricing, he said.
The RealReal reported in November that it saw year-over-year increases of 20% in gross merchandise value (GMV) and 17% in revenue in the third quarter as the luxury resale market continued to attract cost-conscious consumers.
“We are changing the way people shop, making resale a primary option,” The RealReal CEO Rati Saha Levesque said during a Nov. 10 earnings call.
The PYMNTS Intelligence report “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck” found that consumers earning more than $200,000 a year spend a greater percentage of their incomes on luxury experiences than on luxury goods.
