As second-hand luxury resellers become major players in the industry, luxury brands have devised a number of ways to limit purchases and increase their exclusivity. Chanel, Hermès, Burberry, are just a few of the brands that have started to limit consumption.
Just a few days ago, we woke up to the news that Chanel had put certain restrictions on the consumption of the brand’s pieces. The “Classic Flap Bag” and the “Coco Handle” now fall into the same category into which Hermès has put its bags. Each customer can only buy one of these bags per year. In addition, a new policy was implemented for “small leather articles.” Consumers may not buy more than two of the same product per year.
Chanel’s limits are intended to curtail the purchase of popular items in order to stop reselling at a higher price. Before imposing this measure, the French brand had already raised the prices of its products three times in the last year to hinder the resale phenomenon. Over the last few years, other luxury brands have limited the amount of products that can be purchased, too. As mentioned earlier, Hermès has recently restricted purchases to two bags of the same design per customer per year.
Taxes and currency exchanges make luxury goods more expensive in territories like China. Some analysts estimate that Chinese prices are 60% higher than those in Europe. It is well known that students that study abroad buy luxury goods in large quantities in Europe and Hong Kong and then resell them in China.
One of the most famous examples is Burberry. In 2006, when Angela Ahrendts became CEO, the brand was growing just 2% a year in a luxury market that was on the rise. They sold everything, trench coats, blankets, dog leashes…and they sold them to everyone. Ahrendts later said in Harvard Business Review: “In luxury, ubiquity will kill you – it means you’re not really luxury anymore. And we were becoming ubiquitous.” As a result, the company completely restructured, drastically reducing its product range, centralizing production and design, making items more expensive, and restricting consumers.
One of the unintended consequences for brands is that if they become too popular, the items’ value will diminish in the eyes of the consumers they really want to attract. And, this is lesson luxury brands have had to learn and react to.