The fashion industry is facing a critical challenge: how to address the pricing problem and win back shoppers after a period of significant price hikes. The luxury sector, led by French powerhouses Dior and Chanel, is now at a crossroads, with the future of their brands and the industry at large hanging in the balance.
For years, these megabrands have implemented some of the sector's biggest price increases, with Chanel and Dior raising prices by a whopping 59% and 51%, respectively, on key products between 2020 and 2023. This strategy, however, has backfired, resulting in a loss of over 50 million shoppers between 2022 and 2025, according to Bain.
But here's where it gets controversial: despite the sales drop, Chanel and Dior are not lowering the cost of entry for their iconic handbags. Instead, they're focusing on bulking up the lower end of their leather goods selection, offering more affordable options to attract a wider range of customers.
For instance, Dior has increased the proportion of leather goods priced below €4,000 to 87% of their overall offer, up from 69% three years ago. Similarly, Chanel has expanded its selection of leather goods under €4,000, which now accounts for nearly a third of their overall collection.
And this is the part most people miss: these brands are not just adding more affordable options; they're also strategically promoting and styling these products to make them more appealing and accessible. Dior, for example, is partnering with influencers to showcase their new J'Adior ballet flats, priced at €890, as a must-have consumer item.
"You can think about the layer of entry items in a more holistic way," says Claudia D'Arpizio, luxury lead at Bain. "You have to have a compelling offer below a certain psychological threshold that's not an investment."
The strategy seems to be working, with Dior's new Spring/Summer 2026 collection featuring a growing assortment of items under €1,000, including bag charms, brooches, and sneakers. Chanel, too, is offering non-leather purse-on-chain products and leather micro clutches, providing emerging entry points for customers.
However, the road to recovery is not without its challenges. Rising costs and lower consumer confidence continue to impact the industry, making it difficult for brands to regain their footing.
"A big issue for aspirational customers is not willingness to buy, but rather ability to buy," says Berenberg analyst Nick Anderson.
As the industry navigates this complex pricing problem, one thing is clear: the future of luxury fashion depends on finding the right balance between exclusivity and accessibility.
What do you think? Is this strategy a clever move or a risky gamble? Share your thoughts in the comments below!
