Is the sky the limit for luxury fashion?

OPINION_Leaving the question aside if the recent incident in which popular talk show host Oprah Winfrey was refused to be shown a 38,000 dollar bag at an upscale boutique in Switzerland was based on skin colour or simply not looking rich enough,

it shows one thing: That hardly anyone bats an eyelid upon hearing the sum that one can spend on a simple bag.

Most designers offer handbags in the 3,000 dollar and above range, which was quite unheard of only ten years ago; the same goes for shoes. Today, dresses can be sold out even in the 10,000 dollar category and even lingerie and basic accessories have their price.

But on top of the luxury segment, there’s the higher level luxury segment that doesn’t even cater to the rich but the super-rich only. And though as a billionaire, Oprah certainly falls in it, the sales person in the Swiss boutique chose to disagree that day. What exactly caused that assessment will have to remain a speculation but fact is that being caught between a rich and a super rich place is a nice problem to have.

Coming back to so-called high-net-worth individuals (HNWIs), their number has been increasing steadily – by 9.2 percent in 2012 – thus bringing their total number to 12 million people worldwide with combined total assets of 46.2 trillion dollars as calculated by management consultancy Capgemini (for non-HNWIs: a trillion is a 1 with 12 zeroes).

And this seems to be the main reason – as opposed to rising production, material and labour costs - why the price of luxury fashion has been going through the roof – just because it can because there are people out there (all 12 million of them) who are willing to pay the price. “But perhaps the most powerful driver of fast-rising luxury fashion prices is the fact that there are simply more people who are able to pay up,” agrees Lauren Sherman in her Business of Fashion-article of 2nd August “Fashion inflation: why are prices rising so fast?”.

At the other end of the spectrum, one may add, is a growing number of people who simply cannot or do not want to pay up. They hunt bargains either for the sake of it or because buying clothes has become a luxury that can only be achieved by holding the purse strings tight.

So while the prices for luxury fashion seem to be going up, up and further up, those for fast fashion fall to ever new lows. The price gap between these two extremes is widening and retailers and brands usually choose which bandwagon they want to be on. If this ever increasing gap is healthy remains to be seen.

Image: Tom Ford “Jennifer” bag for 3,000 dollars; the crocodile skin version apparently retails for 38,000 dollars