Luxury Labels: Expanding Horizons with Lower-Priced Goods

The luxury market, once an exclusive domain of the ultra-wealthy, is evolving. Luxury brands are increasingly introducing lower-priced goods to appeal to the burgeoning middle-class market. This strategic shift, while seemingly counterintuitive, is a competencies-based approach that allows luxury brands to maintain their high-end image while catering to a broader customer base.

Luxury brands are defined by their exquisite design, craftsmanship, and socio-cultural narratives. By offering a wider range of products, these brands can showcase their expertise, aesthetic taste, and sensitivity to luxury symbolism, not just in their high-end offerings but also in more accessible items. This approach, as discussed in a 2021 ScienceDirect paper, enhances overall brand value and appeal to a broader customer base, as suggested by PwC's 2024 report.

To balance the accessibility of lower-priced goods with maintaining their high-end image, luxury brands employ several strategies. They introduce sub-brands or diffusion lines, such as Chanel's Coco Crush or Gucci's Gucci Garden, which offer more affordable products without compromising the main brand's exclusivity. Additionally, luxury brands focus on unique design, craftsmanship, and sensory appeal, emphasizing the distinct competencies that set their products apart. Lastly, they create immersive, multi-sensory experiences for customers, as highlighted in PwC's 2024 report, to reinforce the luxury brand's value and quality.

However, this strategy may lead to cannibalization of luxury brands' premium offerings. According to a 2021 study, luxury is threatened by lower-priced goods that may dilute the exclusivity and value of high-end products. To mitigate this, luxury brands should focus on developing competencies-based strategies, targeting very important clients (VICs) and ultra-high net worth individuals (UHNWIs), while offering ultra-premium and highly customised products. This approach allows luxury brands to cater to the middle-class market without compromising their premium offerings.

In conclusion, luxury brands' expansion into lower-priced goods is a strategic move to tap into the growing middle-class market. By balancing accessibility with exclusivity and maintaining their competencies-based approach, luxury brands can successfully cater to a broader audience while preserving their premium image. As the luxury market continues to evolve, investors should keep a close eye on these strategic shifts and their impact on the industry's future prospects.