Paying the price
Price architecture = perception architecture
At Watches & Wonders in Geneva a couple of weeks ago, there was a pervasive feeling that people knew what they were paying for. The same cannot be said of luxury fashion. When brands raised prices across every product tier, making even entry-level items inaccessible, they lost more than aspirational consumers. Faced with a $5K sweater or a $1000 bucket hat, the wealthy consumers started doing the math, too. Once that happened, the irrational, aspirational, prestige dimension of luxury — its soft power that powers its pricing— got lost.
Price hikes are a great example of the simultaneous destruction of both economic and cultural value. Not only luxury fashion got more expensive, generating billions of unsold goods, it also lost meaning and clout, forcing the industry to revise its price pyramid from both ends: more accessible staples at the base, genuine exclusivity at the top.
Bigger lesson here is that pricing strategy is not only a financial decision, but a cultural one.
Price tells consumers what category a brand belongs to, what kind of people buy it, and what kind of knowledge they signal by doing so. A $19 bread loaf is not irrational
Behind the paywall, the analysis expands into the information that pricing strategy communicates, how it builds brand equity and commercial scale, and why and how it matters for brand positioning and strategy.
