The Beyoncé Effect: Sweden’s Inflation Feels the Hit
Kanebridge News
Share Button

The Beyoncé Effect: Sweden’s Inflation Feels the Hit

Danske Bank economist estimates Renaissance Tour contributed about 0.2 percentage point

By JOSEPH PISANI
Thu, Jun 15, 2023 8:18amGrey Clock 2 min

Call it Bey-flation.

Sweden’s higher-than-expected inflation in May was due in part to Beyoncé launching her Renaissance World Tour in Stockholm, according to an economist at Danske Bank.

Fans flocking to Sweden’s capital city sent hotel prices soaring, said economist Michael Grahn. Calling it a “Beyoncé blip,” he estimates that Beyoncé’s tour contributed about 0.2 percentage point to inflation.

“This is very rare,” Grahn said about the effect that Beyoncé’s Stockholm performances on May 10 and 11 had. “Basically, her fans vacuumed hotels around Stockholm with a radius of some 40 miles,” bidding up hotel rates.

Inflation in Sweden was at 9.7% in May, falling from 10.5% the month before, according to Sweden’s government. Economists surveyed by FactSet were expecting inflation to drop to 9.2% last month. Statistics Sweden, which puts out the country’s inflation and other economic reports, said hotel and restaurant prices rose 3.3% in May from the month before.

“Beyoncé probably had an effect on hotel prices in Stockholm the week she performed here,” said Carl Mårtensson, a price statistician at Statistics Sweden, “but it should not have had any significant impact” on Sweden’s inflation.

The Renaissance tour, named after Beyoncé’s most recent album, is making its way around Europe before coming to the U.S. next month. The superstar’s first tour in seven years is playing in soccer and football stadiums, where fans watch her dance with robots and sing while riding a mirrored horse that floats in the air.

Beyoncé, whose hits include “Crazy in Love” and “Formation,” broke the record for most Grammy wins in February after “Renaissance” won best dance/electronic music album. She’s had 32 Grammy wins over her career, the most of any person.

When Renaissance tour tickets went on sale earlier this year, Beyoncé superfans, who call themselves the BeyHive, tried to buy tickets in several cities, fearing they would go quickly. A day after tour dates were announced, Ticketmaster said fan demand for the first round of tickets exceeded the number of tickets available by more than 800%.

Grahn said Sweden’s currency, the krona, is weak, which means tickets and other costs are likely cheaper for fans outside the country.

Other superstars touring this year after a long break have also made an economic impact on the cities they have visited.

Taylor Swift, who is in the midst of her Eras Tour, helped Las Vegas nearly match pre pandemic visitor levels when she performed there in March, the Las Vegas tourism authority said. Cities have been going all out to welcome Swifties in town for the Eras Tour, lighting up monuments in her signature colours and temporarily renaming streets after her.



MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Money
Why Prices of the World’s Most Expensive Handbags Keep Rising
By CAROL RYAN 05/03/2024
Money
The Lessons I’ve Learned From My Friends’ Expensive Divorces
By JULIA CARPENTER 05/03/2024
Lifestyle
Only 5% of U.S. Foundations Invest for Impact, Study Finds
By ABBY SCHULTZ 02/03/2024
Why Prices of the World’s Most Expensive Handbags Keep Rising

Designers are charging more for their most recognisable bags to maintain the appearance of exclusivity as the industry balloons

By CAROL RYAN
Tue, Mar 5, 2024 3 min

The price of a basic Hermès Birkin handbag has jumped $1,000. This first-world problem for fashionistas is a sign that luxury brands are playing harder to get with their most sought-after products.

Hermès recently raised the cost of a basic Birkin 25-centimeter handbag in its U.S. stores by 10% to $11,400 before sales tax, according to data from luxury handbag forum PurseBop. Rarer Birkins made with exotic skins such as crocodile have jumped more than 20%. The Paris brand says it only increases prices to offset higher manufacturing costs, but this year’s increase is its largest in at least a decade.

The brand may feel under pressure to defend its reputation as the maker of the world’s most expensive handbags. The “Birkin premium”—the price difference between the Hermès bag and its closest competitor , the Chanel Classic Flap in medium—shrank from 70% in 2019 to 2% last year, according to PurseBop founder Monika Arora. Privately owned Chanel has jacked up the price of its most popular handbag by 75% since before the pandemic.

Eye-watering price increases on luxury brands’ benchmark products are a wider trend. Prada ’s Galleria bag will set shoppers back a cool $4,600—85% more than in 2019, according to the Wayback Machine internet archive. Christian Dior ’s Lady Dior bag and the Louis Vuitton Neverfull are both 45% more expensive, PurseBop data show.

With the U.S. consumer-price index up a fifth since 2019, luxury brands do need to offset higher wage and materials costs. But the inflation-beating increases are also a way to manage the challenge presented by their own success: how to maintain an aura of exclusivity at the same time as strong sales.

Luxury brands have grown enormously in recent years, helped by the Covid-19 lockdowns, when consumers had fewer outlets for spending. LVMH ’s fashion and leather goods division alone has almost doubled in size since 2019, with €42.2 billion in sales last year, equivalent to $45.8 billion at current exchange rates. Gucci, Chanel and Hermès all make more than $10 billion in sales a year. One way to avoid overexposure is to sell fewer items at much higher prices.

Many aspirational shoppers can no longer afford the handbags, but luxury brands can’t risk alienating them altogether. This may explain why labels such as Hermès and Prada have launched makeup lines and Gucci’s owner Kering is pushing deeper into eyewear. These cheaper categories can be a kind of consolation prize. They can also be sold in the tens of millions without saturating the market.

“Cosmetics are invisible—unless you catch someone applying lipstick and see the logo, you can’t tell the brand,” says Luca Solca, luxury analyst at Bernstein.

Most of the luxury industry’s growth in 2024 will come from price increases. Sales are expected to rise by 7% this year, according to Bernstein estimates, even as brands only sell 1% to 2% more stuff.

Limiting volume growth this way only works if a brand is so popular that shoppers won’t balk at climbing prices and defect to another label. Some companies may have pushed prices beyond what consumers think they are worth. Sales of Prada’s handbags rose a meagre 1% in its last quarter and the group’s cheaper sister label Miu Miu is growing faster.

Ramping up prices can invite unflattering comparisons. At more than $2,000, Burberry ’s small Lola bag is around 40% more expensive today than it was a few years ago. Luxury shoppers may decide that tried and tested styles such as Louis Vuitton’s Neverfull bag, which is now a little cheaper than the Burberry bag, are a better buy—especially as Louis Vuitton bags hold their value better in the resale market.

Aggressive price increases can also drive shoppers to secondhand websites. If a barely used Prada Galleria bag in excellent condition can be picked up for $1,500 on luxury resale website The Real Real, it is less appealing to pay three times that amount for the bag brand new.

The strategy won’t help everyone, but for the best luxury brands, stretching the price spectrum can keep the risks of growth in check.

MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Property
The Australian economy could be set for a ‘soft landing’ in 2024
By KANEBRIDGE NEWS 21/12/2023
Property
Are there any affordable homes left in Australia?
By Bronwyn Allen 17/11/2023
Property
Freddie Mercury’s London Home Selling for the First Time Since He Lived There
By LIZ LUCKING 27/02/2024
0
    Your Cart
    Your cart is emptyReturn to Shop