Luxury fashion giants are reshaping their playbook in the face of a global slowdown, betting that \$160 lipsticks and \$1,400 bag charms could be the antidote to sluggish sales. While big-ticket items like high-end handbags and couture pieces face softer demand, companies are experimenting with smaller, more accessible luxuries designed to capture aspirational consumers and keep their brands relevant.

The shift reflects a broader recalibration across the sector as economic uncertainty, rising costs, and consumer fatigue over relentless price hikes weigh on growth. By introducing lower entry points without compromising exclusivity, luxury groups are attempting to expand their customer base while maintaining desirability.

The Rise of “Little Luxuries”

Louis Vuitton’s newly launched beauty collection has become a headline example of this strategy. Its debut lipstick line, priced at \$160 per tube, is part of a broader cosmetics offering that includes lip balms, eyeshadows, and even a \$2,890 miniature trunk to store them. While the prices remain lofty compared to mainstream cosmetics, they are far more attainable than Vuitton’s iconic handbags, many of which cost several thousand dollars.

Other luxury names are following suit. Prada, Celine, Dries Van Noten, and Miu Miu are expanding into beauty, while Coach and Longchamp have pushed into high-end charms and accessories. Louis Vuitton’s \$1,420 bag charms reflect the growing “treat yourself” phenomenon, often called “treatonomics,” in which consumers cut back on larger purchases but still indulge in smaller splurges that feel more manageable.

Industry insiders say the strategy works because beauty and small accessories carry strong margins, help build emotional connections with younger consumers, and act as gateway products into the luxury world.

Why the Pivot Now

The push comes after years of steep price increases in luxury fashion that have drawn backlash from even wealthy shoppers. During the pandemic, luxury houses thrived as stimulus cash and pent-up demand drove record sales. But since 2022, that momentum has slowed, especially in China and the U.S., the sector’s two largest markets.

High inflation has pressured middle- and upper-middle-income households, while affluent buyers are showing fatigue with escalating price tags on core items. Instead of trading up endlessly, many are pausing on big purchases, prompting luxury groups to find new levers to drive volume.

Moreover, geopolitical tensions and tariffs are adding to cost pressures, leaving brands eager to diversify revenue streams. Cosmetics, fragrances, and small leather goods are less exposed to trade disruptions and offer resilience in a volatile climate.

Building Brand Loyalty Early

For luxury strategists, the key is not just revenue today but customer loyalty tomorrow. By onboarding younger buyers through relatively accessible products, brands hope to plant seeds for future spending. A 22-year-old buying a \$160 lipstick today might be the same consumer who invests in a \$5,000 handbag or a \$10,000 watch a decade later.

Executives describe it as climbing a “value ladder” — beginning with cosmetics or accessories, moving up to small leather goods, and eventually graduating to couture or fine jewelry. The lower-ticket items serve as an entry point into the brand’s ecosystem.

At LVMH, executives have underscored the importance of connecting with Generation Z and Millennials, who are not only highly brand-conscious but also expected to inherit significant wealth in coming decades. For these demographics, cultural relevance matters as much as craftsmanship, making categories like beauty, eyewear, and small fashion items strategic vehicles for engagement.

Balancing Accessibility and Exclusivity

The challenge, however, is striking the right balance. Luxury thrives on exclusivity, and any move perceived as too mass-market risks undermining brand equity. Past missteps by labels such as Burberry and Gucci — where heavy discounting damaged prestige — serve as cautionary tales.

To avoid dilution, many houses are careful to differentiate their entry products. Vuitton’s lipsticks, for instance, are marketed not merely as cosmetics but as collectible items, tied to artistic direction from celebrity makeup artist Pat McGrath and encased in elaborate packaging. Similarly, bag charms are positioned not as cheap add-ons but as whimsical luxury statements.

Analysts warn that over-reliance on small luxuries could blur brand identity, but when executed with precision, such diversification has historically worked. During the mid-2010s, luxury houses leaned into streetwear, sneakers, and small handbags, successfully capturing younger consumers without losing their elite status.

The Industry-Wide Trend

Kering, Richemont, and Capri Holdings are all exploring adjacent categories, from high-margin beauty lines to limited-edition accessories. The logic is consistent: when consumer confidence wavers, “entry luxury” tends to perform better than flagship categories.

At the same time, peers are pursuing parallel strategies to weather the slump. Gucci is expanding its eyewear offerings, Hermès has long relied on scarves and fragrances as entry points, and Dior has leaned heavily on cosmetics. Even ultra-high-end watchmakers have introduced lower-priced accessories to diversify their portfolios.

The convergence across brands highlights how common this playbook has become in downturns. Smaller luxuries are not new — fragrances and beauty lines have long served this function — but the price points are higher today, reflecting inflation and the sector’s reluctance to erode margins.

Will It Work?

The big question is whether these strategies can offset the slowdown in high-ticket sales. History offers some reassurance: in prior downturns, such as 2015–2016, small luxury items provided a vital buffer as brands rode out weaker demand in China and other key markets. Those initiatives also helped expand the consumer base, laying the groundwork for future growth when the economy recovered.

But today’s environment poses unique challenges. Inflation is persistent, consumer debt is rising, and competition from premium non-luxury brands is fierce. Aspirational buyers are also more economically sensitive, meaning a prolonged slowdown could limit the effectiveness of treat-driven purchases.

Still, industry leaders believe the long-term payoff justifies the bet. As wealth gradually shifts to younger generations, luxury houses want to secure their loyalty early, even if it means recalibrating their product mix.

A Familiar but Evolving Strategy

While the push into lipsticks and charms might sound novel, it is part of a well-trodden path in luxury retail. Perfumes, cosmetics, and small leather goods have always served as bridges between aspirational and elite consumers. What’s different this time is the level of emphasis, pricing, and urgency amid a global luxury slump.

By placing a \$160 price tag on a lipstick, Louis Vuitton ensures it remains aspirational yet reachable. By crafting a \$1,400 charm, it signals that even small items carry the weight of exclusivity. In both cases, the aim is to preserve the aura of luxury while widening the funnel of engagement.

For now, the strategy underscores a simple reality: when buyers hesitate on five-figure purchases, luxury houses are betting that they will still find room in their budgets — and their hearts — for a little luxury.

(Adapted from CNBC.com)