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After seeing a crisp white button-down shirt make its way down a runway during Paris Fashion Week, I eagerly decided it would be mine. Fast-forward to when it actually hit shelves, the shirt came with an eye-watering price tag of almost AU$4,000. A figure not quite in my budget. But alas, it seems it is for some, as the top sold out days later—in all three colourways.
Despite financial analysts reporting a narrowly missed recession in 2023 and an ongoing cost-of-living crisis that has seen unprecedented inflation on everything from housing to berries, luxury fashion is more expensive and ubiquitous than ever. Factors such as supply chain disruptions, heightened demand, market competition and escalating production costs post-pandemic have all conspired to drive prices of luxury goods soaring with no ceiling in sight. But instead of leaving consumers lamenting their shrinking purchasing power amid global economic hardship, luxury fashion is booming.
According to German data-gathering company Statista, the luxury goods market is projected to generate revenue of US$368.9 billion (AU$550.4 billion) in 2024 and grow at an annual rate of 3.22 percent over the next few years. Though it’s easy to attribute these figures to the uber-rich, the reality is that it’s not just the one percent still lapping up the good life. Data analytics company GlobalData noted that in the US, household incomes of less than US$50,000 (AU$74,000) make up about 27 percent of regular luxury consumers—almost as much as luxury consumers with triple the income. And even though Gen Z workers have been found to earn less—95 percent make less than the national average—and are far less likely to own a home than their older constituents, according to HR platform Employment Hero, they make up a staggering portion of luxury shopper demographics.
In The RealReal’s 2023 report, Gen Z made up 40 percent of high-end bag purchasers out of the site’s 33.6 million users, with the Chanel Classic Flap Bag taking the top spot for the most purchased item among them. Research from Bain & Company also notes that many Gen Zs are making their first luxury purchases much earlier than their predecessors, at as young as 15 years old, despite their dollars not getting them as far these days. The same study revealed that by 2030, Gen Z and millennials would account for 75-85 percent of luxury market purchases. We see this shift in real-time, too. If TikTok’s algorithm is any indication, viral fashion has swiftly evolved from Shein hauls to reviews of The Row’s AU$11,000 Margaux handbag and Alaïa’s AU$1,700 ballet flats. In the beauty world, kids as young as 12 are emboldened to vaunt their Sephora-sourced skincare routines, representing hundreds of dollars of products.
As Luca Solca, a luxury goods analyst at Bernstein, tells me, younger generations have become a major focus for retailers, as their proven eagerness to ‘treat’ themselves stems from being edged out of conventional financial milestones.
“We have seen a large surge of young consumers spending on luxury goods,” says Solca. “They seem to have a higher propensity for discretionary spending and lower inclination to [traditional capital expenditures] than in the past… buying a car or a house is both less relevant and possibly more out of reach.”
Coined ‘The Lipstick Index’ by Estée Lauder’s founder, Leonard Lauder, this long-standing theory, supported by the past, tells us that sales of more accessible luxuries rise during economic downturns. A car, holiday, or even rent in the city may seem completely out of the question financially, but a designer handbag might not be.
Another major contributor to this uptick in younger generations’ penchant for designer goods is their sheer exposure to them. Between social media, advertising, and Hollywood, our parasocial proximity to luxury and product-saturated content has led to an increasing normalisation of consumption.
Timing certainly plays a part, too, as post-Covid-19 consumption statistics paint a picture of a culture in dire need of retail therapy. In 2022, when many began to feel ‘out of the woods’ from the pandemic, instead of emerging as a society rehabilitated from rampant consumerism, fashion experienced a stark upturn, with 95 percent of luxury brands relishing in increased profits. After years of isolation, it seemed people were ready to make up for lost time with what was dubbed ‘revenge spending’. Only, this hasn’t slowed down much in the four years since initial lockdowns, and that could be indicative of the economic turmoil we find ourselves facing once again. A study from the University of Warsaw, which analysed past Google Trends, affirmed that consumers in the US actually tend to seek out luxury goods at higher rates during times of greater economic inequality.
Australia is only fifth on the list of countries with the most credit card debt, and yet a staggering 75 percent of households are in debt, with 13.52 million credit card accounts—more than half of the nation’s adult population—totalling AU$41.09 billion. Chalk it up to our instant-gratification culture or wages that aren’t adjusted to combat inflation, but most of us are struggling to keep up with our outgoings.
For the average shopper who isn’t spending big on a dime, the greatest disruption to pricing hasn’t been the increases of luxury brands but lower-end brands that have chased them up the pricing ladder. With luxury brands squeezed to up their prices due to a confluence of factors, we’re observing the slow death of the upper high street. Once-accessible brands like Zara and Mango have not only leveraged this widening gap between high and low fashion by stepping into a more mid-range bracket, they’ve also worked to expand their premium sub-range offerings at considerably higher price points. As UK retail intelligence company Edited reports, Swedish fashion giant H&M’s average prices went up 12 percent in 2022, while Zara’s went up 20 percent. Even perusing the Spanish clothing brand’s site now reveals leather jackets retailing for AU$1,599, which does appear as the more affordable option when mid-range brands are selling similar styles at the AU$4,000-5,000 mark—just a stone’s throw from prices at French luxury house Celine. But, unlike Celine, their resale value doesn’t have quite the same pull.
As Andrea Cheong, author of Why Don’t I Have Anything to Wear?, observes, the prices may be going up, but when it comes to this tier in particular, the quality is actually getting worse.
“What we get now in a mid-range, ‘accessible-luxury’ price point is kind of on par with the quality of generic High Street brands a few decades ago,” she says, explaining why the mid-range market isn’t seeing the success of the luxury end of the spectrum. “I think this mid-range segment is the trickiest for consumers to navigate because they don’t have the reputation of luxury, but their price points are still high enough that they require an investment over experimentation.”
In this grey area between the high street and the high end, Cheong believes branding and trending aesthetic designs can mask a lack of function and value for money. Even when we do fork out a little more than we’re comfortable with, we simply shrug when these pieces come undone after just a few wears.
“You can see the largest cut-corners with mid-range brands because they may do things like use natural fabrics that are decent quality, but they’ll also be charging a small fortune for a very simple design with little to no premium finishings,” she says, acknowledging that brands like Zara may work with genuine, high-quality leather, but the difference in a Zara tote versus one by Loewe is in the undeniable attention to craftsmanship.
That’s not to say that these more affordable brands are incapable of producing quality products worthy of heftier price tags, but as Cheong attests, shoppers aren’t necessarily privy to all the elements that go into making something of ‘quality’, and that leaves a lot of room for good marketing to swoop in. Plus, with so much on the market to sift through, coupled with the breakneck speed of the modern trend cycle, our ability to discern where our money is best spent is often clouded and easily swayed. Creating videos where she assesses the quality and pricing of brands by breaking down the composition of pieces in granular detail, Cheong’s vast and engaged audience proves that while consumers have an appetite to know more about where their money is going, they’re just not always equipped to be confident in their decisions.
“Not many people—not even some designers or others working in fashion—actually know how clothes are made. And that’s not a criticism, as you don’t need to know everything to do your job,” she says. “In fashion, though, there just isn’t an established interest there for what’s going into these [processes].”
What subsidises this lack of knowledge is the faith we have in brands. These days, this can be acquired through various channels—ambassador alignment, tasteful marketing, social associations, etc. The ‘Veblen Effect’, whereby higher price points can actually increase consumer demand, also has a significant impact on fashion consumption. Take Mary-Kate and Ashley Olsen’s The Row, which saw its early press focused mainly on its exorbitant prices. These numbers haven’t decreased but continue to capture consumers’ attention, many of whom will now happily save up their hard-earned money to become customers.
When we attribute value to a brand, there is a psychological phenomenon at play. A 2019 study conducted by Yale University determined that a desire for authenticity actually develops early
in childhood. When researchers tried to persuade kids to adopt a duplicate of their favourite toy, most refused to accept the changeling. As adults, our sentimentality towards certain purchases evolves in that we appreciate newness, but our quest for authenticity can look like a preference for brands with a trusted perception of quality over outliers. And as we grapple with rising costs of living, perhaps our trust in brands and the figures who endorse them is all we can really rely on.
“In a cost of living crisis, whether or not you still have a lot of disposable income, you are going to be more mindful of what you’re buying,” says Cheong. “You’re going to want to buy something that, to you, is a sound investment, and that’s where established luxury comes to mind.”
Solca echoes this sentiment, noting that in being prompted to be more conservative with our money, it’s natural to look to luxury as worthwhile spending.
“Consumers spending less become choosier and concentrate their spend on a smaller number of must-have brands,” he says. And they’re right to think so. Just look at Chanel’s classic bag styles. Retail prices may be going up year-on-year, but their resale value is indisputable. In fact, according to Sotheby’s, the average, well-maintained Chanel bag increases in value by 10-15 percent every year, proving that when it comes to some luxury purchases, you really are buying into an investment with proven returns.
Recent research from Vestiaire Collective’s 2024 Circularity Report even revealed that second-hand luxury is more cost-effective in the long run. Conducting a consumer survey with 13,400 participants from around the world, the French resaler analysed and compared the longevity of second-hand clothing against new fast fashion, with results showing that across all categories and price points, “high-quality second-hand fashion items offer around 33 percent lower cost-per-wear compared to fast-fashion items, and are worn twice as often, on average.” It also found that consumers keep their second-hand products on average 31 percent longer, contributing to this lower cost-per-wear.
Luxury, by its very definition, is not something we’re supposed to afford with ease. Even the permissibility of ‘affording’ goods is something many of us struggle to reconcile with. In a culture that rewards consumption, the cognitive dissonance of accepting that we may have $4,000 in our bank accounts but might not be able to afford a $4,000 shirt is where our boundaries are perhaps becoming blurred.
There are many social factors feeding into our desire to own whatever we want, but the state of our global economy urges us to be more mindful of what’s driving our purchases. The cost of living isn’t getting any lower, and salaries aren’t getting any higher. And though it’s an innately human experience to seek out life’s little luxuries in dire times when facing crippling financial uncertainty, it’s easy to get swept up in it all. As Cheong acknowledges, mindless consumption has left us disconnected from our possessions, often leading us to feel that we have nothing to wear despite possessing a wardrobe brimming with clothes. In her experience, the more we are able to meaningfully engage with our purchases, the more confident we can be in getting dressed.
“We use clothes to communicate who we are, but if we can’t explain where our choices come from or [wholly] back them, then of course we’re going to feel unsure or forget about them altogether,” she says. “When we can show up to the world with the vocabulary of knowing ourselves through our choices, we’re forming the foundations of our style.”
This doesn’t mean avoiding fast fashion altogether; rather, she urges that we take the time to consider our options instead of chasing trends at the speed at which they’re served to us.
“Overconsumption has been so normalised. It’s so common for us to spend all our disposable income and not feel like we have control over it,” she says. “It’s such a toxic relationship to have with fashion, and we need to heal from this.”
Even if my salary doubled—tripled, even—four grand will never be ‘plain white shirt’ money. And while seeing it sell out does sting a little, like seeing a crush with someone else, there is a kind of healing in appreciating the beauty and value of its craftsmanship while accepting that it’s simply not for me. And that’s ok.
THIS FEATURE IS PUBLISHED IN GRAZIA’S 18TH PRINT EDITION. ORDER YOUR COPY HERE.
