Luxury brands, prices are stagnant

HSBC's latest luxury goods pricing barometer shows that the luxury goods industry is entering a "restrained era," bidding farewell to the "greedy inflation" seen post-pandemic. On June 17, according to news from the Chase Trading Desk, HSBC stated in its latest research report that global luxury goods prices have only increased by about 2% on average compared to the previous report dated December 1, 2024, marking one of the smallest increases observed in recent years. Among the 21 brands tracked by HSBC, only 2 brands saw price increases in the high single digits, 3 brands had moderate single-digit increases, and 7 brands experienced low single-digit price hikes. The remaining 9 brands either kept their prices unchanged or adjusted prices in only one market. The report points out that the appreciation of the euro has led to a general decline in global price premiums, with the price premium in the Chinese market hitting a historic low of only 112 (with Europe as the benchmark at 100). Unfavorable exchange rates will suppress overseas spending by American and Chinese tourists, putting pressure on European luxury retail. Unfavorable Exchange Rates Affect Consumers' Willingness to Purchase Overseas The report states that unfavorable foreign exchange trends are putting pressure on key consumer groups' overseas luxury spending. The exchange rate of the US dollar against the euro is at a low not seen in about 3.5 years, which may affect American consumers' luxury travel spending in Europe from Easter to late July. The exchange rate of the Chinese yuan against the euro is hovering around a nearly ten-year low, which may also put pressure on Chinese tourists' spending. HSBC also noted that, based on international flight data from mainland China, as of June 10, 2025, the average daily number of international flights has recovered to 84.7% of the level seen in the same period in 2019. Analyzing by region, during the week of June 2-8, 2025, flights to Central Asia accounted for 222% of the 2019 level, while flights to North America were only at 29%. The number of mainland Chinese tourists to major Asian destinations is rebounding but still remains below 2019 levels. Price Premiums Decline in All Markets Except Japan HSBC stated that due to the appreciation of the euro against most currencies, price premiums have declined in all markets except Japan. Among them, the price premium index in the United States is at a 3.5-year low, while the price premium in China has reached a historic low, dropping to 112 (relative to the 100 level in continental Europe), which is the lowest point since HSBC began tracking this metric. In terms of specific exchange rate changes, since the November 2024 report, the euro has appreciated by 11% against the Hong Kong dollar, 10% against the US dollar, and 9% against the Chinese yuan. The average appreciation of the euro against 11 major currencies is 6% Significant Brand Pricing Differentiation HSBC stated that since late April, due to the impact of U.S. tariffs, several luxury brands have made noticeable price adjustments in the U.S. market. Brands such as Burberry, Dior, and Ray-Ban have seen relatively high price increases in the U.S., with an average increase of about 2%, reflecting the transmission of tariff costs to consumers. Additionally, the report pointed out that there are significant differences in the price increase strategies of different brands. Among iconic products in 12 countries, Hermès had the highest increase at 7%, Gucci at 5%, and Tiffany at 3%. In contrast, brands like Tod's, Saint Laurent, and Coach maintained their prices. From a long-term perspective, compared to 2019, luxury goods have seen a massive price increase, with an average increase of 55%. The Prada Galleria handbag increased by 117%, the Louis Vuitton Speedy bag by 106%, the Chanel 2.55 handbag by 91%, and the Gucci Marmont small bag by 88%. The average price increase across brands reached 55%, far exceeding the inflation rate during the same period