Luxury goods: The value for money question

The concept of ‘value for money’ may seem incongruous with respect to luxury goods, where exclusivity and craftsmanship often overshadow considerations of production costs. However, the modern luxury industry operates on a volume-driven model where cost efficiency directly impacts profitability and is thus of great concern. This article explores the economic dynamics of the luxury goods sector, highlighting recent trends such as escalating post-pandemic price inflation, shifts in consumer spending patterns and evolving operational strategies among top luxury brands. Three key strategies that luxury brands can employ to confront the ‘value for money’ challenge are identified: fostering creativity and innovation to captivate consumers, investing in superior product quality and craftsmanship, and recalibrating entry-level price points to re-engage aspirational buyers. By adapting to these shifts, luxury brands can sustain their appeal and profitability in an increasingly competitive landscape.