When Jenny Lei launched her bag company Freja, she thought about how much money she would want to spend on a job as a 20-year-old in New York City, she says.
“I think the right treatment is less than $300. In addition, I start to negotiate with myself,” said Lei, now 30 years old, who launched Freja in 2019 after struggling to find job tote for job interview. Freja bags, made of vegan leather, now sell for $258 to $398 — more expensive than the $62 nylon option from Baggu, but less than the previous $2,700 Goyard carryall — to tens of thousands of customers each year, primarily in their 20s and 30s, Lei said.
A growing number of Gen Z and millennial shoppers are ditching budget and luxury brands alike — and gravitating toward mid-priced merchandise across a range of industries including apparel, jewelry and home goods, some marketing and retail experts say. Brands have never been an expensive option, but they are just expensive enough to count as a splurge for young consumers who are advanced enough in their careers to have extra cash to spend.
Mid-priced products allow zillennial consumers, who are not immune to the rising cost of living, an opportunity treat them more often — compared to saving up for years to splurge on one luxury item, says Jennie Liu, a Yale School of Management professor who studies brands. “Today’s consumers don’t want to wait, they don’t want to save,” Liu said.
About one-third of the world’s consumers say they are willing to go deep in fashion, according to a McKinsey and Business of Fashion report published in January. But while a $5,000 pair of earrings from a luxury brand may be hard for a young consumer to justify, a $150 pair, made of gold, may be an easy sell — especially from the brand’s millennial marketing attributes such as artisanal 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 clothing retailer Arc’teryx or a $160 lipstick from Louis Vuitton — just to have something from a traditionally important retailer. Businesses can benefit: Luxury labels can still connect new customers with their less expensive products, while raising prices across their catalog.
Mid-priced brands — sometimes called “affordable luxury” or “advanced luxury” — don’t dominate the entire retail industry, but their popularity reflects consumers’ purchasing priorities, said Marni Shapiro, founder and managing partner of research and consulting firm Retail Tracker. The more popular these things are, the more pressure they put on the budget and luxury ends of their markets to shift to the middle ground, Shapiro said.
Some fast fashion brands, such as H&M and Spain’s Bershka, have reduced the number of low-priced brands in the UK, according to a report by McKinsey and the Business of Fashion. Their aim may be to differentiate themselves from more expensive options, such as Shein and Temu, and offer the same “accessible aspiration” look that mid-priced brands offer to “more focused consumers,” the report found.
“The definition of luxury has changed a lot,” in this generation, Lei said. “In the past it was, ‘I buy luxury items because I want to be someone else and that item gives me status.’ Now, luxury is a choice. What I invest in is my taste, instead [an identity] I’m trying to get in.”
A changing market, a new class of consumers
Mid-price product companies are not new, but the popularity of the sector has historically ebbed and flowed. In fashion, for example, 2000s-era brands like Coach, Kate Spade and Michael Kors reached out to non-affluent department store shoppers – until many of those. consumers turned to fast fashion after the 2008 financial crisis, said Thomaï Serdari, an associate professor of marketing at New York University’s Stern School of Business who studies the luxury goods market.
For about a decade, that sector has been K-shaped: Luxury brands attracted affluent consumers and fast fashion offered a niche for everyone, Serdari said. And the post-recession economy has made it difficult for would-be entrepreneurs to start mid-price competitors, Shapiro said.
Today, you can buy an eight-piece stainless steel cookware set for $970 from All-Clad, a nine-piece look-alike version from Ikea for $100, or one of several mid-priced options — a 10-piece titanium set from Our Place for $490 or a HexClad 12-piece set for $700, for example. A variety of moderately priced options It would have been difficult to find a decade ago, Shapiro said.
Our site, like many other mid-priced modern brands, gained popularity after launching in 2019 by promoting a single product – “Your Always Pan” – on social media. “Some of these products [become popular] by using one product as a brand,” said Liu. “Whether you know the brand name or not, the product is highly visible on social media, and it works as a brand. [before the company] gradually expanding their product line.”
The definition of luxury has changed a lot… Now, luxury is a luxury of choice.
Jenny Lei
Founder and CEO, Freja
Social media, in general, has overcharged this generation of middle-priced brands, said Americus Reed, a marketing professor at The Wharton School of the University of Pennsylvania. “There are many channels to test and spread who we are,” he said. In some ways, young consumers are using the brands they see on social media to develop their sense of identity and project it to others — the same way some people build their identity by volunteering at church or playing sports in a local league, he adds.
Social media shopping services like TikTok Store have also reshaped consumer expectations, in the same way that on-demand platforms like DoorDash, Uber and Amazon Prime did a decade ago, Liu said: “You can go from product awareness to purchase within minutes.” Consumers’ willingness to interact with brands on social media allows marketers to pull tricks out of the “luxury playbook,” he notes, including “talking about how products are made, made in a small town, made slowly.”
Notably, a mid-range price tag does not necessarily guarantee high quality, Sedari said. Recently, one of his MBA students was showing off his blazer, a trendy product from a mid-range brand, he says.
“I was curious about the blazer and I checked it out online. It’s polyester,” Sedari said. “I’m not willing to pay $400 for a polyester coat.”
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