When Jenny Lei launched her handbag company Freja, she thought about how much she’d personally want to spend on a work tote as a 20-something in New York City, she says.
“I think a justifiable treat is less than $300. Above that, I start bargaining with myself,” says Lei, now 30, who launched Freja in 2019 after struggling to find an appropriate work tote for a job interview. Freja bags, made with vegan leather, now sell for $258 to $398 — more expensive than $62 nylon option from Baggu, but less than a $2,700 pre-owned Goyard carryall — to tens of thousands of customers each year, primarily in their 20s and 30s, says Lei.
A growing number of Gen Z and millennial shoppers are ditching budget and luxury brand products alike — and gravitating toward mid-priced retail items across a wide range of industries including clothing, jewelry and homeware, some marketing and retail experts say. The products are never the most expensive option, but they cost just enough to count as a splurge for young shoppers who’ve advanced enough in their careers to have some extra cash to spend.
Mid-priced products allow zillennial consumers, who aren’t immune to rising costs of living, the opportunity to treat themselves more frequently — compared with saving up for years to splurge on a single luxury item, says Jennie Liu, a Yale School of Management lecturer who researches branding. “Today’s consumer doesn’t want to wait, they don’t want to save up,” Liu says.
Nearly a third of global customers say they’re willing to splurge on fashion, according to a McKinsey and Business of Fashion report published in January. But while a $5,000 earrings from a luxury brand might be difficult for a young shopper to justify, a $150 pair, still made in gold, could 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 buy a small item from a luxury brand — like a $60 hat from outdoor apparel retailer Arc’teryx or $160 lipstick from Louis Vuitton — just to own something from a culturally significant retailer. The businesses can benefit: Luxury labels can still hook new customers with their least expensive products, while raising prices on the rest of their catalogue.
Mid-priced products — sometimes referred to as “affordable luxury” or “advanced contemporary items” — aren’t necessarily outpacing the rest of the retail industry, but their popularity is reflective of zillennial consumers’ shopping priorities, says Marni Shapiro, a co-founder and managing partner of research and consulting firm The Retail Tracker. The more popular these items become, the more they pressure the budget and luxury ends of their markets to shift toward a middle ground, Shapiro says.
Some fast fashion brands, like H&M and Spain-based Bershka, have reduced the number of products in their lowest price tiers in the UK, according to the McKinsey and Business of Fashion report. Their intent is likely to separate themselves from ultra-low-cost options, like Shein and Temu, and give the appearance of the same “affordable aspiration” that mid-priced brands offer to “trend-focused shoppers,” the report found.
“The meaning of luxury has changed a lot,” for this generation, says Lei. “In the past it was, ‘I buy luxury because I want to be someone else and that item gives me status.’ Now, luxury is luxury of choice. What I invest in is what my taste is, instead of [an identity] I’m trying to fit into.”
A shifting market, a new class of consumers
Companies that sell mid-priced products aren’t new, but the sector’s popularity has historically ebbed and flowed. In fashion, for example, 2000s-era 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, says Thomaï Serdari, an 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, says Serdari. And the post-recession economy made it difficult for would-be entrepreneurs to start mid-priced competitors, says Shapiro.
Today, you can buy a $970 stainless steel eight-piece cookware set from All-Clad, a similar-looking nine-piece version from Ikea for $100, or one of several mid-priced options — a 10-piece titanium set from Our Place for $490 or 12-piece HexClad set for $700, for example. The variety of mid-priced choices would’ve been harder to find a decade ago, Shapiro says.
Our Place, like multiple other modern mid-priced brands, gained popularity after launching in 2019 by advertising a single product — its “Always Pan” — on social media. “Some of these brands [become popular] by utilizing one product as the brand,” says Liu. “Whether or not you know the brand name, the product becomes very visible on social media, and kind of serves as the brand [before the company] gradually expands their product line.”
The meaning of luxury has changed a lot … Now, luxury is luxury of choice.
Jenny Lei
Founder and CEO, Freja
Social media, in general, has supercharged this generation of mid-priced brands, says Americus Reed, a marketing professor 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 their sense of self and signal it to others — similar to how some people build their identities around volunteering at church or playing sports in a local rec league, he adds.
Social media shopping services like TikTok Shop have also recalibrated consumer expectations, similar to how on-demand platforms like DoorDash, Uber and Amazon Prime did a decade ago, says Liu: “You can go from awareness of a brand to purchase within minutes.” Consumer willingness to engage with brands on social media enables retailers to pull tactics “from the luxury playbook,” she notes, including “talking about how the products are made, that they’re made in a small town, that they’re crafted slowly.”
Notably, a mid-range price tag doesn’t necessarily promise high quality, says Sedari. Recently, one of her MBA students was showing off her blazer, a trending product from a mid-priced brand, she says.
“I got very curious about the blazer and went to check it out online. It’s polyester,” says Sedari. “I’m not willing to pay $400 for a polyester jacket.”
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