Interesting. Notoriously private and privately held Chanel gave two public and published interviews this month. At first blush, perhaps it shouldn’t be a surprise that Chanel leaders participated in a fashion forum or made comments about its latest runway extravaganza. But, maybe it is a hint of something to come. A warning to expect slower growth and price increases.
Regarding the interviews, the first, as part of Business of Fashion’s VOICES 2023, was with CEO Leena Nair. Nair recently completed her first two years at Chanel, during which she immersed herself in Chanel and all of its enterprises. With Business of Fashion she discussed her vision and goals.
Read: Chanel’s Outlook on Price Increases, Online Sales and the Resale Market
Image courtesy: @thestylishfreelancer
Now, in connection with the Chanel 2024 Métiers D’art show in Manchester, England, Chanel President Bruno Pavlovsky spoke with the Financial Times about 2024.
Read: Chanel Takes Manchester by Storm: A Closer Look at the Métiers D’art 2023-24 Bags
As reported, Pavlovsky spoke about the financial and fashion headwinds facing the company and the industry heading into 2024 and that Chanel is preparing for a “tougher” year. He says it is more difficult “everywhere in every single country.”
“Luxury is not protected from the economy . . . I don’t have a crystal ball, but the situation will be tougher than what we saw in 2023.”
Image courtesy: @asafetypin
Image courtesy: @asafetypin
Additionally, much like LVMH Chief Financial Officer Jean-Jacques Guiony, Pavlovsky warns that it is unreasonable to expect ever-continuing double digit growth. As you may recall, in announcing slightly disappointing Q3 financial results, LVMH’s Guiony called it “more normalized growth.” He continued: “After three roaring years, and outstanding years, growth is converging toward numbers that are more in line with historical average.”
Read: LVMH Revenues Grow, But More Slowly Based on 2023 Q3 Results
In his recent interview, Pavlovsky said virtually the same thing, calling the current downturn “normal.” According to ft.com, he goes on to project confidence about 2024’s financial results, pointing to the “strong relationship” Chanel has with its clients.
Image courtesy: @sweet8824
Of course, that begs the question, which clients? Will Chanel abandon the rich but not rich enough that are part of the “aspirational” consumer group? Long time and newer Chanel clients bemoan and criticize the heavy price hikes imposed by the brand over the last few years – doubling the price of the Classic Flap handbag since 2019 from $5800 to $10,200. Finding any Chanel handbag for less than $5000 has become increasingly difficult, even as it introduces new popular styles, like the mini Chanel 22. Rumors of impending increases surround every new collection, with scores of shoppers swearing off (perhaps temporarily) further purchases and/or turning to the resale market.
And according to the interview, Pavlovsky suggested there will be further price increases, albeit in line with the lower rate of inflation.
“The idea is not to be the most expensive, but just to be sure the prices are at the level of the business . . . We do not want to disconnect anyone from the brand.”
Image courtesy: @thestylishfreelancer
Yet, many of Chanel’s actions seem to have the opposite effect. Already accused of adopting the Hermès playbook of limited supply, to many, Chanel’s elevated prices seemed a reach for more exclusivity – only the super rich can afford the Classic bags and there will be fewer of these available. Indeed, Chanel’s efforts to court the ultra wealthy are not subtle, establishing private salons to provide exclusive shopping experiences to the few, in contrast to the “masses” who sometimes find themselves low priority when it comes to hot items. With top echelon brands like Chanel keeping a tight control on inventory – in part out of concern for declining spending – there can develop a ladder of who has access and who doesn’t not.
Whether the uber-rich can keep the financial party going for Chanel, remains to be seen. Perhaps the answer comes if and when Chanel published 2023 year-end results. In the meantime, what are your Chanel shopping plans? Bags or lipstick? Let us know.
Read related articles:
Chanel’s Outlook on Price Increases, Online Sales and the Resale Market
LVMH Revenues Grow, But More Slowly Based on 2023 Q3 Results
The Surprising Original Price of Favorite Chanel Items in Your Closet
Chanel Takes Manchester by Storm: A Closer Look at the Métiers D’art 2023-24 Bags
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Updated: December 19th, 2023
Comments
2 Responses to “Chanel Speaks Out and Hints at Further Price Increases”
I was just in Paris and was surprised at how empty the Chanel stores were. Maybe my timing was off, but the Saint Honore store, the makeup one, was not that busy even though they do sell other items. And the main store, didn’t seem too crowded either. Both LV’s I visited, Place Vendome and flagship, were much busier IMO. I don’t think this bodes well for Chanel.
Man it will be interesting to see if Chanel truly has outpriced itself. Let the statistics speak for themselves. The people on top are gradually destroying this brand. They can’t play the Hermes game while decreasing the quality of their leathergoods