Submission No.

：C000019 An Empirical Analysis of Pricing in Luxury Fashion Brands

Fashion Design & Business Keywords: Luxury fashion, Online store, Regular and selli...

ISASE 2019

An Empirical Analysis of Pricing in Luxury Fashion Brands

Takao FURUKAWA*, Mariko NAKAZAWA **, Chikako MIURA * and Kaoru MORI ***
* Kyoritsu Women’s University, 2-2-1 Hitotsubashi, Chiyoda-ku, Tokyo 101-8437, Japan
{tfuruakwa,cmiura}@kyoritsu-wu.ac.jp
** e-Agency, 1-9-4 Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan
mariko.nakazawa@dragon.jp
*** Keio University, 5322 Endo, Fujisawa-shi, Kanagawa 252-0882, Japan
kmori@sfc.keio.ac..jp

Abstract: Characteristics of luxury fashion brands were unveiled from regular and selling prices extracted from retail online stores
specialized for luxury fashion. This paper introduced an assumption that a brand determines regular prices definitively, however, retail
online stores dynamically adjust selling prices considering the balance between consumer demand and producer supply. Regular price
distributions showed the prestige of 34 luxury fashion brands, where traditional French and Italian brands appeared in in a higher rank.
However, two emerging luxury brands also appeared in a higher rank. This result suggests mobility of creative talents enabled to inherit
brand equity of traditional and prestigious brand beyond the border of brands. The result of ANOVA suggests that 34 luxury fashion
brands were segregated in the market, even price distributions overlap each other. Two-way ANOVA for brand groups comprised and
main and diffusion lines confirmed the difference between lines and the difference between regular and selling prices. This paper
classified these brand groups into five types based on brand operations in addition to the price relationship between main and diffusion
lines.
Keywords: Luxury fashion, Online store, Regular and selling prices, Prestige, Diffusion line

1. INTRODUCTION difficult to generalize due to the limited cases.

Ready-to-wear products of luxury fashion brands
Market of personal luxury products and services are
appeared in fashion shows give a great impact to mass
expected to continue the growth mainly in developed and
fashion products and lead entire fashion trends. Luxury
emerging countries. The market size has amounted to 262
fashion brands limit distribution channels to directly
euro billion in 2017, which is three-fold increase
managed stores and department stores to provide special
compared to the market size in 1996 [1]. Luxury products
purchase experiences for customers by the visual
that fascinates the customers are quite different from
merchandising like a museum. Therefore, luxury fashion
commodity products, in terms of the tangible and
brands avoid selling their products in general merchandise
intangible added value that cannot be expressed by their
stores, where various brand products are mixed, as the
function and performance.
distribution channel. Consequently, the limited
Luxury products and brands have been studied from
distribution channels allow luxury brands to strictly
studied from multifaceted viewpoints, in an
control price and brand image
interdisciplinary field comprised of cultural backgrounds
In recent years, the online market has shown rapid
of history and heritage, product design and integrity, and
growth. Online stores must be considered as a distribution
marketing strategy such as positioning and pricing. In
channel, even for a luxury brand due to the large economic
particular in marketing research, existing frameworks
impact. This paper explores the attributes of luxury
designed for commodity products emphasizing high
fashion products such as brand, prices, etc. extracted from
performance and low price were not enough for analyzing
web pages of online stores. We shed light on dynamic
luxury products [2]. Quantitative analyses of consumer
pricing of luxury fashion products observed from the
investigation targeting luxury brands were also reported
difference between regular and selling prices, and
so far In behavioral science and psychology [3,4]. Except
quantitatively analyze characteristics of brands.
the papers on brand extension [5-8], existing papers
discussed case studies focusing on a specified luxury 2. METHOD
brand [9-10]. Results in these papers are interesting but
2.1 Online luxury fashion store

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Submission No.：C000019 An Empirical Analysis of Pricing in Luxury Fashion Brands
Fashion Design & Business Keywords: Luxury fashion, Online store, Regular and selli...

The online stores of luxury fashion products are definitively, however, retail online stores dynamically
categorized into flagship online stores and retail online adjust selling prices considering the balance between
stores. The following directly managed online stores are consumer demand and producer supply.
typical flagship online stores.
3.2 Price distribution
• Hermès, www.hermes.com
Firstly, we assume that the regular prices reflect the
• CHANEL, www.chanel.com
brand prestige. Secondary, we selected luxury fashion
• Louis Vuitton, www.louisvuitton.com
brands selling more than 800 items in retail online stores
• 24 Sèvres managed by LVMH, www.24sevres.com
to ensure the reliability of quantitative analysis. In
In 2000, Yoox and Net-A-Porter opened their retail online
addition to these brands, we added Burberry Prorsum,
stores specialized for luxury fashion, respectively. Since
which was a representative UK luxury fashion brand
Yoox and Net-A-Porter have a long history and large
studied so far [8]. Figure 1 demonstrates the regular price
revenue in retail online stores for luxury fashion. In this
distribution of various products by brand with a
study, we selected Yoox and Net-A-Porter that covers
logarithmic scale. A box with a vertical line indicates 25%,
various brands for sources of quantitative analysis.
50%, and 75% percentiles of the regular price distribution.
2.2 Product attributes A horizontal dotted line indicates the range between
An HTML file on web page describes attributes of lowest and highest prices. The result of ANOVA, F (33,
selling products in retail online store. Table 1 shows the 126652) = 835, p < 0.001, suggests that 34 luxury fashion
attributes of luxury fashion products sold in Yoox and Net- brands were segregated in the market, even price
A-Porter. We developed a crawling application distributions overlap each other.
automatically collecting product HTML and image files In figure 1, brands were listed in order from the highest
periodically, which saves them on a cloud service. We also mean regular price. Burberry Prosum regarded as a high-
developed scraping program extracting product attributes grade line of Burberry was ranked at the top. Except Tom
shown in Table 1 by Ruby programming language using Ford and Alexander McQueen, French and Italian brands
Nokogiri package. with a long history, such as Valentino, Saint Laurent, Dior,
Table 1: Product attributes Celine, Gucci appeared in a higher rank. Burberry
1. Date 6. Regular price established by Thomas Burberry at Basingstoke in the UK
2. URL 7. Selling price
3. Brand name 8. Stock in 1886 has more than 160 year history. Burberry Prosum
4. Product name 9. Image file name established in 1999 is a new brand, but inherits the
5. Product ID 10. Path to image file tradition of Burberry from the 19th century. Gucci
2.3 Brand established by Guccio Gucci in Florence, Italy in 1923
This study selected prominent European, American and after World War I was a leather goods manufacturer. Dior
Japanese luxury fashion brands that satisfy enough established by Christian Dior in Paris, France in 1946 after
number of products sold in the US market to our analysis. World War II is a core brand in conglomerate LVMH.
Table 2 summarized the numbers of selected luxury Valentino was established by Valentino Gravani at Rome,
fashion brands by country. Italy in 1957. Saint Laurent was established by Yves Henri
Table 2: Number of selected brands Donat Mathieu-Saint- Laurent under support from Pierre
Country France Italy UK US Japan Bergé in Paris, France in 1962. These brands have more
Brands 21 20 8 15 10
than 60 years history, at least. It suggests that long history
and tradition of the brand and premium price shape the
3. PRESTIGE OF LUXURY FASHION BRANDS prestige.
Tom Ford ranked as the 2nd place was established by
Price is the most significant factor characterizing
Thomas Carlyle Ford and Domenico De Sole in 2006.
products as well as a luxury fashion products. There are
Alexander McQueen ranked at 6th place was established
various prices in accordance with distribution processes.
was established by Lee Alexander McQueen himself in
For example, producer cost is comprised of manufacturing
1992. These two brands did not have a long history and
cost and producer profit. Wholesale and retail prices
tradition at a glance, compared with typical luxury brands
contain distribution margin in addition to the producer
described above. It is very interesting why these two
price. Regular and selling prices in this paper are the retail
brands can keep the premium price in spite of relatively
price of online stores. This paper introduced an
assumption that a brand determines regular prices short history.

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Submission No.：C000019 An Empirical Analysis of Pricing in Luxury Fashion Brands
Fashion Design & Business Keywords: Luxury fashion, Online store, Regular and selli...

This paper discusses how emerging luxury brands brand image with the main line for young consumers who
acquire a prestigious position in the market in the short do not have enough disposable income [8].
term. Thomas Carlyle Ford had worked as a creative Figure 2 shows regular and selling price distribution of
director of Gucci and Yves Saint Laurent Rive Gauche. brands operating diffusion lines. White and gray boxes
When he joined to Gucci in 1994, Gucci had been illustrated distributions of regular and selling prices,
fundamentally restructuring the historical brand to respectively. Main and diffusion lines tend to be divided
regenerate. Therefore, he had experienced how to into high and low prices. This tendency clearly appears in
establish prestigious brands in this period. Lee Alexander in Armani, Chloé, and Valentino. In terms of brands (main
McQueen had also worked as a designer for historical and diffusion lines) and prices (regular and selling), we
brands such as Givenchy. In spite of the relatively short applied two-way ANOVA for each brand group. In case of
history of Tom Ford and Alexander McQueen, mobility of Giorgio Armani, Emporio Armani, and Armani Exchange,
creative talent enabled to inherit brand equity of for main and diffusion lines, F(2, 26291) = 4071, p <
traditional and prestigious brand such as Gucci and 0.001, for regular and selling prices, F(1, 26291) = 1455,
Givenchy beyond the border of brands. Indirect p < 0.001. Consequently, two-way ANOVA confirmed
inheritance of DNA from traditional and prestigious that the difference between main and diffusion lines and
brands will be a significant issue for an emerging luxury the difference between regular and selling prices for all
fashion brand for success in the market, from the aspect of brand groups. Although Miu Miu is a diffusion line of
brand management. Prada, mean regular and selling prices of Miu Miu were
Mean
Quartile both higher than that of Prada. Mean regular and selling
prices of Junya Watanabe Comme des Garçons were both
Burberry Prorsum, N=302
Tom Ford, N=961 higher than that of Comme des Garçons.
Valentino, N=4651 Mean
Regular price
Saint Laurent, N=2482 Selling price
Givenchy, N=2989
Alexander McQueen, N=2488
Dior, N=1550 Giorgio Armani, N=1422
Céline, N=2142 Emporio Armani, N=11475
Gucci, N=6628 Armani Exchange, N=252
Giorgio Armani, N=1422 Chloé, N=4019
Chloé, N=4019 See by Chloé, N=4922
Miu Miu, N=5126
Jil Sander, N=2269
Fendi, N=4111
Jil Sander Navy, N=1243
Dolce & Gabbana, N=10896
Valentino, N=4651
Balenciaga, N=3608
RedValentino, N=6736
Prada, N=9517
Alexander Wang, N=2617
Marc Jacobs, N=2623
Maison Margiela, N=4640 T by Alexander Wang, N=830

Salvatore Ferragamo, N=2062 Maison Margiela, N=4640

Dries van Noten, N=1037 MM6 by Maison Margiela, N=2368
Burberry, N=1390 Prada, N=9517
Jil Sander, N=2269 Miu Miu, N=5126
Marni, N=5309 Comme des Garçons, N=738
Stella McCartney, N=5297 Junya Watanabe Comme des Garçons, N=438
Burberry London, N=1056
Dolce & Gabbana, N=10896
Alexander Wang, N=2617
D&G, N=765
RedValentino, N=6736
Marc Jacobs, N=2623
Burberry Brit, N=1129
Marc by Marc Jacobs, N=6791
Jil Sander Navy, N=1243
Moncler, N=611
Emporio Armani, N=11475
MM6 by Mason Margiela, N=2368 Moncler Gamme Rouge, N=124

See by Chloé, N=4922 Moncler Gamme Bleu, N=7

Marc by Marc Jacobs, N=6791 Moncler Grenoble, N=53

T by Alexander Wang, N=830 Donna Karan, N=314
DKNY, N=999
Burberry Prorsum, N=302
20 50 100 200 500 2000 5000 20000 Burberry, N=1390
Price [US$] Burberry London, N=1056

Figure 1: Regular price distribution of luxury fashion brand. Burberry Brit, N=1129

4. DIFFISION LINE 20 50 200 500 2000 10000 50000

Price [US$]
An existing luxury fashion brand often creates a new Figure 2: Regular and selling price distribution by brand group.
line whose price level is lower than the main line to supply
inexpensive products. A new branched line has been Table 3 classified these brand groups into five types
called a diffusion or second line. A diffusion line intends based on brand operations in addition to the price
to supply inexpensive products that share prestigious relationship between main and diffusion lines. Brands

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Submission No.：C000019 An Empirical Analysis of Pricing in Luxury Fashion Brands
Fashion Design & Business Keywords: Luxury fashion, Online store, Regular and selli...

classified into divided price lines type clearly divide main brands from price information extracted from retail online
and diffusion lines to high and low prices. Brands stores. Regular and selling prices for 72 brands were
classified to multiple high price lines has high priced analyzed. We assume that the brands definitively
diffusion line like Prada – Miu Miu and Comme des determine the regular price, and retail online stores
Garçons – Junya Watanabe Comme des Garçons. In dynamically adjust the selling price reflecting the balance
these brand groups, the diffusion line has established a between consumer demand and producer supply. The
strong position as an independent brand in the market. result suggests that emerging luxury fashion brands such
Other brand groups discontinued diffusion lines, which as Tom Ford and Alexander McQueen inherited brand
were subdivided into discontinuance of high or low price equity from historical and prestigious brands by mobility
lines and integration. of creative talents. It will be an important issue to create a
Table 3: Classification of brand groups comprised fo main and prestigious luxury fashion brand.
diffusion lines. Mean
Regular price
Type Main line Diffision lines Selling price

Divided price Giorgio Armani Emporio Armani Sacai, N=465

lines Armani Exchange Issey Miyake, N=211

Chloé See by Chloé Junya Watanabe Comme des Garçons, N=438

Jil Sander Jil Sander Navy Comme des Garçons, N=738
Velentino RedValentino
Issey Miyake Cauliflower, N=167
Alexander Wang T by Alexander Wang
Maison Margiela MM6 by Maison Margiela 20 50 200 500 2000 10000 50000
Multiple high Prada Miu Miu
Price [US$]
price lines Comme des Junya Watanabe Commes
Garçon des Garçon Figure 3: Price distribution of Japanese brands.
Discontinuance Dolce & Gabbana D&G
of low price Marc Jacobs Marc by Marc Jacobs ACKNOWLEDGMENTS
line This work was supported by Grant-in-Aid from the
Discontinuance Moncler Moncler Gamme Rouge Centre for Interdisciplinary Studies of Science and
of high price Moncler Gamme Bleu Culture, Kyoritsu Women’s University.
line Moncler Grenoble
Donna Karan DKNY REFFERENCES
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