Luxury brands diversify with lipsticks $ 160, 1400 accessories amid fall

When almost all buyers face a sense of sticker prices, some luxurious fashion lines experiment with new, less expensive products so that they remain relevant and attract new consumers.

Last month Louis Vuitton’s Loved Collection Collection Hit Branded Store and Consensions, noting the latest iteration for the age of 171 Lvmh-The luxurious titanium.

And although fragrant lipsticks with the signature do not become cheap at $ 160 per pop, it indicates a wider shift among the luxury players trying to get more buyers through the door without spreading their flagship offers.

“I believe this is a very suitable step,” said Luca Solca, head of the global luxury goods sector in Bernstein, who has widely studied diversification of luxury brands, CNBC reports.

“Mega-brands would be reasonable not to sell too many of their main products and use lower absolute price categories to interact with wider (range) consumers,” he said.

With the respected makeup artist Pat McGrate as a creative director, Louis Victon, it may hope that the range of 55 lipsticks, 10 lip balms and eight palettes – and accompanied by $ 2890 – the highway – will appeal to its cult of the following young, consumers of the United States.

From this it follows a similar extension in cosmetics on brands such as PradaCeline LVMH, Dry Van Note and, soon, Miou. “Beauty is an attractive category from a financial point of view, as it offers high GM% (gross profitability),” Bernstein said in March.

Meanwhile, Labubu’s explosive popularity gave birth to a new wave of extravagant bags, including the trainer, Longchamp and $ 1420 from Louis Vuitton because brands argued with this The trend is “treats” Will seduce buyers to deploy small luxury, even if they cut large tickets.

Luxury diversification arises when the sector fights a slowdown in the world, tariffs in the US and broader pressure.

“Brands have been using the Playbook book since 2015, 2016,” Jelena Sokolova, a senior Morningstar stock analyst, said, citing another softness period in the field of immersion in Chinese demand.

“Then the brands turned into street clothing, such as sneakers, smaller handbags and bags,” she said. “These efforts have been quite successful in the past with an increasing share of the purchase of a millennial consumer with the support of a common pickup in the mood.”

This time the luxurious industry has been under pressure since 2022, when the Boom of the era gave way to the malaise, as consumers were tired of steep- and often what they considered without a big-entertaining price.

In the 2022 report, Bank of America stated that the income and growth of the sector governing will be determined by three factors: doubling the common addressed market (TAM), including with new products; increase in cultural significance; and the constant reinvestment of the brand to increase desirability.

“New categories are growing Tam and increasing cultural relevance,” said the head of the European Consumer Discrete Director at Bank of America Securities, and one of the reports, the CNBC e -mail said.

Other examples of new luxury categories include shoes, glasses, perfumes and small leather products.

Low entry points in prices can, in turn, lead a younger and wider consumer base in the brand ecosystem with the hope that buyers will eventually develop a sense of loyalty.

“Younger customers are increasingly engaged in luxury, supported by cultural significance, online interaction and advertising. Because these customers move on, accumulate more assets and transfer between generations of wealth, this young generation will control a large proportion of the global power of wealth and consumption.

LVMH Chief Financial Director Sesil Kabanis recognized this strategy during the call for profits in the second quarter of the French luxury conglomerate in July.

“You also need to contact the younger generation,” she told investors. “You also have to have an offer where you can meet them on board, and then they can pass the stairs of your value.”

“We refuse to do this with cheap bags. The way we do is Vuitton. Vuitton is always the best desirability, always the best quality. So, you use available products to do this: perfume, small leather products, and there are some others.

But the brands have a great balance to strike over their attractiveness without diluting the exclusivity of their labels.

Sokolova said that pushing for new, lower pricing categories should be made with the expansion of more expensive brand offers to make sure he continues to serve more wealthy consumers.

Some brands learned about this lesson with a difficult way. In the past, a big discount with Burberry and Gucci’s sympathy has left them struggling to return their status among high costs.

Whether the last stage of diversification of categories of brands in the modern era of economic pressure and compressed consumer expenses will still have to be found.

“It was successful 10 years ago. It is still early to say,” Sokolova said.

“Any brand must prove itself with a new generation of consumers, otherwise its attractiveness will grow old with current buyers.