Luxury brands plan to raise prices in Europe

Europe is outpacing the economic crisis -although slowly- and that is being noticed in the estimates of luxury companies. In recent years, many of them have decided to freeze their prices or even lower them to the impact that the crisis was having on their sales in Europe.

The strategy followed by many of these brands has been to grow in Asia, where there is great potential for growth in number of shops thanks to the purchasing power and the good taste for luxury of the citizens of those countries. Given that potential and the business growth, key brands have continued raising prices in other regions, especially Asia, which together with the weak euro has created significant differences between prices in Europe and abroad. Now, the situation is changing and brands begin to prepare for it. The first to announce its plans was Chanel, who decided to raise prices in Europe and lowering prices in mainland China from April 8 to reduce this spread of prices.

The second company which has announced the same intention has been Burberry, although in this case it would be a double measure: reduce slightly its prices in Asia while increase them in Europe. This double decision is due to the big difference now in prices between the two regions, as the company has one of the highest spread in the industry. In any case, the decision would only be a response to potential movements of their competitors. Similar measures were taken by Tag Heuer, but in this case to fight against the effect of the Swiss currency revaluation.

Another group that has also manifested in this sense is the giant LVMH, which has decided to wait until currencies stabilize before making a decision, but certainly has not ruled out similar measures than its competitors.

Anyway, any cut in prices in China will not have a huge event in the industry sales in that country, as 70% of the purchases by Chinese citizens are done abroad.