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Stealth Inflation in Luxury goods
EJ warned about stealth inflation - paying the same while getting less.
In my role as a husband to a wife who frequent luxury stores for handbags here are my observations:
Louis Vuitton, Cartier, Chanel, TOD's, Tiffany, Gucci, and other major brands always increase their prices every year on most if not all of their items by 10-15%. Without factoring in discounts that you might see in some countries, the official prices however, remained the same during 2009. Since 2009 and continuing to now in 2010, these labels have raised prices slightly by about 10% for old / classic items, yet at the same time pushed out new and slightly lower priced items but with inferior "quality".
Take LV for example. One of the best selling handbag from anecdotal and personal observations in HK / China was a large open bag with straps coming down on the side with a cost of about 5800 HKD.
This is a very low entry point for a large handbag for LV. People flocked to it to buy it. However, if you compare this bag among these new ones with models released prior the financial crisis, you will find a common theme among the new design: low level of sewing/work required.
Essentially, it is a sheet of LV canvas, wrapped from front to back making a 'U' shape and only sewed up on the side. There is no shape, no corners, no need for extra piece of fabric or additional sewing work. What you are getting is not luxury goods.
Chanel also has new models based on the Timeless classic style look, and a jumbo size at that. However, the Jumbo size is the same price range as a medium size that retails around 22000 HKD. What a bargain! Not if you looked closely.
The older Chanel bags use sheep leather / small lamb leather and each diamond is supple, shines, and the sewing is fine and visible down to the small detail. They are really nicely made bags and design. However, the new classic Jumbo is not the same. The colour looks dull, the sewing is rough, and the leather is neither supple nor flat. 2 sizes up and still around the same price as a medium. Hmm.
As compared to a collector's edition of Valentine's Day Chanel bag in a mini size, these are done the old way, with the better fabric, the better design, but even this item has the innards leather removed and replaced with cheaper materials. This item is 2 sizes down and retails 18000 HKD, without its collector's item status, the retail price should probably be around 15000 HKD while using much less fabric than what a Jumbo uses.
Taking a look at the 2010 new LV style small luxury items again, including their new coin purse. What would one see in their new coin purse? Leather patterns (Chicken / Rabbit) sewed onto their original Monogram-styled coin purse.
So LV is trying to add-on something to an old design (or perhaps items in inventory) and release it as a new item? Canada's Roots did something similar when they had the old passport cover on sale at $19 CDN (retailed $45 CDN) and then removed those, and later released a sewed-on Canadian Flag red / white Leather piece onto the same passport cover. The Canadian flag add-on is not done in an integrated way but obviously just sewed-on and sells the same item at $45-60 CDN.
That is stealth inflation. EJ called it correctly. Paying the same while getting less. His observation of less choices rings true in clothing shops as well.
In clothing stores, you'd rarely see 100% Cotton anymore. If you feel your previous clothing wore better or had better fabric, check the material tags and compare to the new clothing out right now. Chances are you will see changes in materials and thickness of the item, as well as changes to where the production is made, while the retail price still starts out high if not higher than your previous items.
Sure, marketing can sell a thinly made 100% cotton white-tee and call it see-through style. To me, that is just a thin fabric shirt being sold at the same price as the previous thick fabric shirt. I wonder what happens next when stealth inflation runs out its course.
Just sharing my 2cs.
In my role as a husband to a wife who frequent luxury stores for handbags here are my observations:
Louis Vuitton, Cartier, Chanel, TOD's, Tiffany, Gucci, and other major brands always increase their prices every year on most if not all of their items by 10-15%. Without factoring in discounts that you might see in some countries, the official prices however, remained the same during 2009. Since 2009 and continuing to now in 2010, these labels have raised prices slightly by about 10% for old / classic items, yet at the same time pushed out new and slightly lower priced items but with inferior "quality".
Take LV for example. One of the best selling handbag from anecdotal and personal observations in HK / China was a large open bag with straps coming down on the side with a cost of about 5800 HKD.
This is a very low entry point for a large handbag for LV. People flocked to it to buy it. However, if you compare this bag among these new ones with models released prior the financial crisis, you will find a common theme among the new design: low level of sewing/work required.
Essentially, it is a sheet of LV canvas, wrapped from front to back making a 'U' shape and only sewed up on the side. There is no shape, no corners, no need for extra piece of fabric or additional sewing work. What you are getting is not luxury goods.
Chanel also has new models based on the Timeless classic style look, and a jumbo size at that. However, the Jumbo size is the same price range as a medium size that retails around 22000 HKD. What a bargain! Not if you looked closely.
The older Chanel bags use sheep leather / small lamb leather and each diamond is supple, shines, and the sewing is fine and visible down to the small detail. They are really nicely made bags and design. However, the new classic Jumbo is not the same. The colour looks dull, the sewing is rough, and the leather is neither supple nor flat. 2 sizes up and still around the same price as a medium. Hmm.
As compared to a collector's edition of Valentine's Day Chanel bag in a mini size, these are done the old way, with the better fabric, the better design, but even this item has the innards leather removed and replaced with cheaper materials. This item is 2 sizes down and retails 18000 HKD, without its collector's item status, the retail price should probably be around 15000 HKD while using much less fabric than what a Jumbo uses.
Taking a look at the 2010 new LV style small luxury items again, including their new coin purse. What would one see in their new coin purse? Leather patterns (Chicken / Rabbit) sewed onto their original Monogram-styled coin purse.
So LV is trying to add-on something to an old design (or perhaps items in inventory) and release it as a new item? Canada's Roots did something similar when they had the old passport cover on sale at $19 CDN (retailed $45 CDN) and then removed those, and later released a sewed-on Canadian Flag red / white Leather piece onto the same passport cover. The Canadian flag add-on is not done in an integrated way but obviously just sewed-on and sells the same item at $45-60 CDN.
That is stealth inflation. EJ called it correctly. Paying the same while getting less. His observation of less choices rings true in clothing shops as well.
In clothing stores, you'd rarely see 100% Cotton anymore. If you feel your previous clothing wore better or had better fabric, check the material tags and compare to the new clothing out right now. Chances are you will see changes in materials and thickness of the item, as well as changes to where the production is made, while the retail price still starts out high if not higher than your previous items.
Sure, marketing can sell a thinly made 100% cotton white-tee and call it see-through style. To me, that is just a thin fabric shirt being sold at the same price as the previous thick fabric shirt. I wonder what happens next when stealth inflation runs out its course.
Just sharing my 2cs.
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