When Jenny Ray started her handbag company, Freja, she says she thought about how much she personally wanted to spend on a work tote as a woman in her 20s living in New York City.
“I think a legitimate reward is less than $300. Anything above that starts to be a negotiation with yourself,” says Ray, now 30. He launched Freja in 2019 after struggling to find the right work tote for a job interview. The Freja bag, made from vegan leather, currently sells for $258 to $398, making it more expensive than Baggu’s $62 nylon option but cheaper than a used Goyard carryall that costs $2,700. It’s sold to tens of thousands of customers each year, mostly in their 20s and 30s, Ray said.
According to some marketing and retail experts, a growing number of Gen Z and Millennial shoppers alike are ditching low-end and high-end brands alike and gravitating towards mid-priced retail products in a wide range of industries, including clothing, jewelry and home goods. These products aren’t the most expensive options by any means, but they’re priced high enough to count as a splurge for younger shoppers who are well into their careers and have some cash to spend.
Jenny Liu, a lecturer at Yale School of Management who studies branding, says mid-priced products give millennial consumers, who are not immune to rising costs of living, the opportunity to treat themselves more often than they would spend years buying luxury items. “Today’s consumers don’t want to wait and they don’t want to save,” Liu said.
A report published in January by McKinsey & Business of Fashion found that nearly one-third of customers worldwide said they were willing to splurge on fashion. But while $5,000 earrings from a luxury brand may be difficult to justify to young shoppers, $150 earrings made of gold may still be an easier sell, especially from a brand that touts millennial-chic attributes like craftsmanship, environmentally friendly materials, and humane factory environments.
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Or that shopper might buy a luxury brand accessory (like a $60 hat from outdoor apparel retailer Arc’teryx or a $160 lipstick from Louis Vuitton) just to own something from a culturally significant retailer. Companies will benefit. Luxury brands can attract new customers with their cheapest products while increasing the prices of the rest of the products in their catalog.
Mid-priced products, sometimes referred to as “affordable luxury” or “advanced contemporary items,” don’t necessarily outperform other products in retail, but their popularity reflects the shopping priorities of millennial consumers, said Marni Shapiro, co-founder and managing partner of research and consulting firm The Retail Tracker. The more popular these products become, Shapiro said, the more pressure there is to move the market toward the middle ground between budget and luxury products.
Some fast fashion brands, including H&M and Spain-based Bershka, have reduced the number of products in their lowest price ranges in the UK, according to a report by McKinsey and Business of Fashion. Their intention is likely to be to separate themselves from ultra-low-priced options like Shein and Temu, and offer the same “aspirational affordability” that mid-priced brands offer “trend-focused shoppers,” the report said.
For this generation, “the meaning of luxury has changed a lot,” says Ray. “It used to be, ‘I buy a luxury item because I want to be someone else, and the item gives me status.’ Now, luxury is a luxury choice. I’m investing in my taste, not the identity I’m trying to fit.”
Changing markets, new consumer groups
Companies selling mid-priced products are not new, but the popularity of this category has historically waxed and waned. In fashion, for example, 2000s brands like Coach, Kate Spade and Michael Kors reached non-wealthy shoppers in department stores until many of those consumers turned to fast fashion after the 2008 financial crisis, said Thomai Serdari, an associate professor of marketing at New York University’s Stern School of Management who studies the luxury market.
For about a decade, the field remained K-shaped. Luxury brands attracted wealthy consumers, and fast fashion provided a popular outlet for the rest of the population, Serdari said. And the post-recession economy has made it difficult for would-be entrepreneurs to start mid-priced competitors, Shapiro said.
You can now buy an 8-piece set of stainless steel cookware from All-Clad for $970, or a similar-looking 9-piece version from IKEA for $100. You can also purchase one of several mid-priced options. For example, Our Place’s titanium 10-piece set is $490 and its HexClad 12-piece set is $700. Shapiro said a wide range of mid-priced options would have been harder to find 10 years ago.
Our Place, like several other mid-priced brands, gained popularity after launching in 2019 by promoting one product on social media: Always Pan. “Some of these brands[become popular]by leveraging one product as a brand,” Liu said. “Whether you know the brand name or not, the product becomes very visible on social media and acts as a brand before[the company]gradually expands its product line.”
The meaning of luxury has changed a lot… now luxury is the luxury of choice.
Jenny Ray
Freya, Founder and CEO
Amekas Reed, a marketing professor at the Wharton School of the University of Pennsylvania, said social media in general has given this generation of mid-priced brands a huge boost. “There are more channels to explore and spread who we are,” he says. In a sense, young shoppers use the brands they see on social media to increase their sense of self and communicate that to others. This is the same as people who build their identity by volunteering at church or playing sports in local rec leagues, he added.
Social media shopping services like TikTok Shop have recalibrated consumer expectations, just as on-demand platforms like DoorDash, Uber, and Amazon Prime did a decade ago. “You can go from brand awareness to purchase within minutes,” says Liu. She points out that with consumers wanting to engage with brands on social media, retailers can pull tactics “out of luxury play,” such as “talking about how the product is made, that it’s made in small towns, that it’s made slowly, etc.”
In particular, Sedari says that mid-priced products don’t necessarily guarantee high quality. Recently, she says, one of her MBA students was showing off a blazer, an on-trend item from a mid-priced brand.
“I was really interested in this blazer, so I looked it up online. It’s made of polyester,” Sedari says. “I don’t want to pay $400 for a polyester jacket.”
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