In an attempt to expand their customer base and win back middle-income shoppers, luxury brands such as Burberry and Yves Saint Laurent have begun to review their pricing policies. This decision is driven by the desire to attract a wider audience of 330 million people who spend less than $2,180 per year on luxury goods, but account for more than half of all purchases in this segment. At the same time, buyers with incomes above $21,775 per year, although they make larger purchases, account for only 10% of total sales.

Why do brands take such steps? Part of the reason lies in their own pricing policy. Aggressive price increases, as happened with Burberry bags, which have become 58% more expensive, have alienated many potential middle-class buyers.

However, price reduction is only part of the strategy. Wealthy clients, who make up a smaller part of the buyers, but bring in more income, require new approaches from brands. They are looking for innovation and personalization. Companies such as LVMH are successfully coping with this task, increasing revenue by 11% thanks to their Selective Retailing division, which focuses on individual customer needs.

Thus, luxury brands face a difficult dilemma: On the one hand, they strive to expand their audience and attract new customers, on the other — to maintain the loyalty of existing customers who expect exclusivity and innovation from them. To successfully solve this problem, brands need to find a balance between accessibility and prestige, offering both affordable products and exclusive collections for the most demanding customers.

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