When readers leaf through the September issue of Vogue, they encounter a Prada mohair twin set tagged at $2,925; a chunky Giles sweater at $3,675; and a supersize Marc Jacobs bracelet at $2,180. And in stores, shoppers will find basic designer sheath dresses selling for $1,200, coats for just under $4,000 and designer sunglasses for $500 or more.
This is the fourth consecutive autumn season in which a weak dollar has meant higher prices for designer clothing, much of which is made in Europe or stitched from fabrics imported from European mills. As the value of the dollar shrinks against the euro, prices continue to climb, with retailers citing hikes of as much as 15 percent for shoes and bags this year compared with last.
Yet, merchants and manufacturers have seen surprisingly little resistance in recent seasons to the cost of luxury goods.
So strong is the demand for cashmere car coats and crinkled patent leather bags at Barneys New York that that two firms — one from Dubai, the other from Japan — are in a bidding war this month to acquire the store for close to $1 billion. The luxury conglomerate LVMH, the owner of Louis Vuitton, had net profits for the first half of 2007 of $1.11 billion, up 2 percent from a year ago. Profits at the parent of Gucci and at Prada are also up.
Those brands owe part of their success to shoppers with caviar taste who have come to view extravagant prices as an enduring, if unwelcome, fact of life. At the same time, another consumer cohort is driving the trend, shoppers for whom a high ticket can in itself be an inducement to buy. Just as makers of premium ice cream have persuaded consumers to pay $4 for a cone instead of 90 cents, and California vintners convince them that a $100 cabernet is better than a $50 bottle, the makers of designer clothing know that high prices can cast a spell.
“Price certainly plays into a product’s allure,” said Robert Burke, a retail consultant in New York. “For certain people, the higher the price, the more attractive the item becomes.”
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An exorbitant price can confer exclusivity. “People are willing to pay a significant amount of money to make sure they don’t see their purchase on other people,” Burke said.
Or to ensure that their friends will recognize its provenance.
“Price is part of the status of certain luxury items,” said Marvin Traub, a retail consultant in New York. Traub, who visited Moscow in March, noticed that people there were fascinated not by how little but how much was paid.
To some extent, Traub noted, “that sort of thinking translates here too.”
Among merchants and manufacturers, consumer psychology can be as significant as economics in setting prices.
“Luxury makers are not necessarily forced to raise prices above the exchange-rate factor, but sometimes they do,” said Milton Pedraza of the Luxury Institute, a research group in New York. “Why? They know that consumers are resilient. For manufacturers, it’s really about asking for a price increase because you can.”
Those remarks resonate with Jeffrey Kalinsky, a specialty retailer who owns fashion emporiums in New York and Atlanta. Kalinsky, who is also the director for designer merchandising of Nordstrom, does not pretend to speak for his customers. But he shares their sometimes-irrational passions.
He recalled that 20 years ago, when he was in his mid-20s, he would “just walk into a store and see a sweater, and something inside of me would say, ‘Oh, I hope I can afford it. I bet it’s at least $800.'” That sweater would be $1,100, Kalinsky confided, “but, miraculously, then I would want it more.”
In some cases, manufacturers adjust prices upward to make sure that their goods hang in good company, displayed alongside prestigious luxury brands. “They tack on a healthy premium, because they want to maintain the exclusivity of the brand,” Pedraza said.
Susan Sokol, the president of Vera Wang, acknowledged that while it is important to maintain a range of prices within a collection, “it is extremely critical to understand price positioning and to be very strategic about it.
“If I know our customer is buying Miu Miu or Dries van Noten,” she said, “we have to price accordingly.”
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The appetite for high-end wares has been a boon to retailers, who need to sell fewer of a given item to turn a handsome profit. The higher the price, the higher the margin, Burke pointed out: “It’s much easier to sell five of something really expensive than 20 of something less expensive.” Markups, he said, have remained much the same since last year.
A stroll through several high-end stores in Manhattan recently turned up prices that might be the equivalent of a down payment on a minivan. At Jeffrey, in the Meatpacking District, a raglan-sleeve black jersey Lanvin dress was $2,455, a Shawn Collins thermal knit sweater $995. Barneys offerings included a Balenciaga leather bag with fancy grommets, $1,725; Lanvin leather ballet flats, $530; and Marc Jacobs cuffed leather ankle boots, $995.
At Bergdorf Goodman, a Stella McCartney turtleneck devoid of trim sells for $995, and her cable-stitched sweater for $1,495. A pair of Kieselstein-Cord sunglasses is tagged at $595. Far from daunting, such a ticket might be downright seductive to customers, Sokol said. “When you are looking at a handbag or even a pair of sunglasses, a high price can have inherent snob appeal.”
That is not to say that consumers are indifferent to price. Many are making emotional adjustments, finding ways to balance a love of fashion with the reality of its increasingly exorbitant cost. Eunice Ward, a lawyer in Chicago with a taste for quirky labels like Dolce & Gabbana and Stella McCartney, pays full price only for items that resonate with her sense of style. During a recent shopping trip, she spied a Yohji Yamamoto sweater.
“I knew it would fit with my wardrobe and update everything,” she said, “that it was going to be my workhorse for fall.
“I didn’t even check the price at first. I knew I would love it, and I didn’t care.”