When Jenny Lei launched her handbag company Frieza, she thought about how much she personally would spend on a work tote as a 20-year-old in New York City, she says.
“I think an appropriate gift is under $300. Above that, I start bargaining with myself,” says Lei, now 30, who launched Freyja in 2019 after struggling to find a suitable one. Work tote for job interviews. Freja bags, made from vegan leather, now sell for $258 to $398 — more expensive than Baggu’s $62 nylon option, but less than a $2,700 pre-owned Goyard Carryall — for thousands of customers each year, primarily in their 20s and 30s, Lei says.
Some marketing and retail experts say a growing number of Gen Z and millennial shoppers are abandoning budget and luxury brand products — and moving toward moderately priced retail items across a wide range of industries, including clothing, jewelry and homeware. The products are never the most expensive options, but they’re priced high enough to count as a splurge for younger buyers who have advanced far enough in their careers to have some extra cash to spend.
Mid-priced products provide opportunities to younger consumers who are not immune to the rising cost of living Say, treat yourself more often – versus saving for years only to splurge on the same luxury item. Jenny LiuLecturer at Yale School of Management who researches branding. “Today’s consumer doesn’t want to wait, they don’t want to save,” Liu says.
According to this, almost a third of global consumers say they are willing to spend money on fashion McKinsey and the Business of Fashion Report Published in January. But where a young buyer might find it difficult to justify $5,000 earrings from a luxury brand, a $150 pair, still made of gold, might be an easier sell — especially from a brand advertising millennial-chic qualities like artisan craftsmanship, eco-conscious materials or humane factory conditions.
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Alternatively, that shopper might purchase a small item from a luxury brand—such as a $60 hat from outdoor apparel retailer Arc’teryx or a $160 lipstick from Louis Vuitton—just to purchase something from a culturally significant retailer. Businesses may benefit: Luxury labels can still attract new customers with their least expensive products, while raising prices on the rest of their catalog.
Mid-priced products – sometimes referred to as “affordable luxury” or “upscale contemporary items” – are not necessarily outpacing the rest of the retail industry, but their popularity reflects the shopping preferences of millennial consumers, says marnie shapiroCo-founder and managing partner of research and consulting firm The Retail Tracker. Shapiro says that the more popular these items become, the more they pressure their markets’ budgets and luxury to move to a middle ground.
Some fast fashion brands such as H&M and Spain-based Bershka have reduced the number of their lowest-priced products in the UK, according to McKinsey and Business of Fashion reports. The report found that they intended to differentiate themselves from ultra-low-cost options like Shein and Teemu and give the same “affordable aspiration” appearance that mid-priced brands offer “trend-focused shoppers”.
“The meaning of luxury has changed a lot for this generation,” says Lei. “In the past it was, ‘I buy luxuries because I want to be like someone else and that item gives me status.’ Now, luxury is a luxury of choice. What I invest in is my interest, not (an identity) I’m trying to fit into.”
A changing market, a new class of consumers
Companies selling mid-priced products are not new, but the popularity of this sector has historically waxed and waned. In fashion, for example, 2000s brands like Coach, Kate Spade and Michael Kors reached non-wealthy buyers in department stores – until many of them Says consumers turned to fast fashion after 2008 financial crisis Thomai SerdariAn associate professor of marketing at New York University Stern School of Business who studies the luxury goods market.
For about a decade, that sector remained K-shaped: luxury brands attracted wealthy consumers and fast fashion provided a popular outlet for everyone else, Cerdari says. Shapiro says the post-recession economy has made it difficult for would-be entrepreneurs to launch mid-priced competitors.
Today, you can buy a $970 stainless steel eight-piece cookware set from All-Clad, a similar-looking nine-piece version for $100 from Ikea, or one of several mid-priced options—a 10-piece titanium set for $490 from Our Place or a 12-piece HexClad set for $700, for example. Variety of mid-priced options It would have been hard to find a decade ago, says Shapiro.
Our Place, like many other modern mid-priced brands, gained popularity after launching in 2019 by advertising one product – its “Always Pan” – on social media. “Some of these brands[become popular]by using a product as a brand,” Liu says. “Whether you know the brand name or not, the product is very visible on social media, and the 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 lei
Founder and CEO, Freeja
He says social media in general has supercharged this generation of mid-priced brands America ReedIs Professor of Marketing at the Wharton School of the University of Pennsylvania. “There are more channels to explore and distribute who we are,” he says. In a way, young shoppers use the brands they see on social media to develop a sense of self and give signals to others — in the same way some people build their identity around volunteering at church or playing sports in a local rec league, he adds.
Liu says social media shopping services like TikTok Shop have also readjusted consumer expectations, as on-demand platforms like DoorDash, Uber and Amazon Prime did a decade ago: “You can go from awareness of a brand to purchase in minutes.” Consumers’ desire to engage with brands on social media enables retailers to create strategies “from the luxury playbook”, including talking about “how products are made, that they’re made in a small town, that they’re gently crafted”.
Sedari says that in particular, a mid-range price doesn’t necessarily promise high quality. Recently, she says, one of her MBA students was showing off her blazer, a trending product from a mid-priced brand.
“I was curious about the blazer and looked it up online. It’s polyester,” says Sedari. “I’m not willing to pay $400 for a polyester jacket.”
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