As we stay home sheltering in place, and sometimes web surfing, we couldn’t help but wonder: What happens in a pandemic to brands that have a strict policy against online sales of any kind, not even via their own platforms. The prime example of this is Chanel, which eschews online sales – even from its own site – of fashion items including ready-to-wear and handbags. The anachronism of that decision presumably has worked well for maintaining desirability of Chanel’s goods. However, is this strategy effective in the era of Covid-19 when brick and mortar consumption is virtually shut down?
Up until now, limiting the ability to purchase from stores only helped Chanel maintain an esoteric charm and desirability. Lack of online sales has not proven to be much of a disadvantage for it. Chanel’s huge profit margins, which are also a result of not keeping unnecessary inventory or having to invest in logistics, worked well.
During a pandemic, however, it’s a different story. Chanel boutiques are shuttered. Department stores with in-house Chanel boutiques are also closed. And yes, some department store sales associates have periodic access to merchandise, but it’s spotty and variable. So while you can admire all of the Chanel bags and clothing on Chanel’s website and on Instagram, without internet sales, there is virtually no retail outlet to purchase from. That translates to no sales revenue.
In this regard, Chanel is in stark contrast to that of, for example, Louis Vuitton. Although Louis Vuitton stores remain closed, there are sales to be made from its online store. Even Hermès will take online orders, although the ability to ship immediately is in question. With such a different sales strategy, it raises the question of whether Chanel loses market share demand by frustrated potential shoppers who must turn elsewhere during the shutdown.
Nor can Chanel rely on an easy bounce-back once we are relatively safe from this novel coronavirus. True, there may be some initial pent-up demand. At some point, some people will want to treat themselves. However, on a longer term basis, a post-covid world is likely to be quite different from the world we have known till now. This includes the world of luxury. All of us will be exercising caution and are unlikely to want to venture into a mall or high street unless absolutely necessary. With the second and third waves of the virus that we are seeing in several countries, unless a cure or vaccination is developed soon, the fear is legitimately here to stay. When combined with a younger, tech-savvy population entering the aspirational and luxury consumer segment, keeping sales exclusively offline may not be so prudent.
Fortunately for Chanel, it is privately held, and, at least before this crisis, hugely profitable. Likely it has sufficient financial stability to weather this storm and invest in the future. This period of global lockdown is an opportune time for Chanel to demonstrate agility and innovate with respect to e-commerce. With facemasks and monetary donations, Chanel found ways to stay relevant and grab customers attention during these times. Being seen as a sustainable and ethically conscious brand will help with its brand positioning in better times when we are ready and able to shop again and can hopefully access our favourite Chanel bags and accessories!
Do you think Chanel should sell its handbags and ready-to-wear directly from its website? On the other hand, perhaps you cherish the exclusive boutique experience? Let us know.