Here’s Why Chanel is Going to Open Private Boutiques

The fallout and discussion from Chanel’s stated plans to open ‘private’ boutiques for top tier customers is far from fading. Social media and private fashionista conversations sustain the chatter from all points of view. Some who expect to be premier, welcome the idea of a special place and extra attention. Others in that category fear entry will make them a crime target. There are those who aspire to be in the top group, feeling frustration that they won’t be. And, not surprisingly, there are folks utterly offended at the thought, including being essentially told they’re not good enough to shop in the store.

One thing is for sure, people are talking, and that includes Business of Fashion editors, Lauren Sherman and Robert Williams, who devoted an entire podcast episode to the topic. They started with a reiteration of Chanel’s continuing financial success: that its stated 50% growth is probably an understatement as the beauty business has been a drag on revenue through the pandemic.

Chanel NYC, Bloomberg.

Striking was their statement that first time buyers are still flocking to Chanel. Apparently, the ginormous price hikes during our pandemic times have not (yet) thwarted this demand. Of course, should a recession come, Chanel – which clearly has survived many economic downturns over the decades – will need to rely on its key business. That, in turn, may depend upon the ability to convert these first time purchasers into “repeat and frequent” buyers. This in turn may rest upon the quality of the store experience, how the customer is treated, and, naturally, the creativity of the products.

Also interesting was Williams’ take on the long lines at Chanel boutiques, a common complaint particularly among established clients. As we previously wrote, a recent article questioned whether these lines were the result of brands like Chanel limiting crowds due to COVID even though restrictions are mostly gone.

Many wondered whether it be something else: creating the impression of exclusivity and demand? Or perhaps crime prevention, given the many smash and grab cases involving handbags. Then again, while COVID restrictions have eased, COVID itself is still very much present. Another possibility is that Chanel is simply concerned about the health and safety of its employees and customers.

Read: Is Queuing In Long Lines Here to Stay

Chanel queue outside Beverly Hills Chanel temporary store @pursespotter

Williams says he believes overcrowding is a real issue. Chanel, he says, only has 250 boutiques worldwide, and the top items like handbags and ready-to-wear, are only sold in store. Chanel’s continuing resistance to e-commerce for these items in effect requires consumers to go to brick and mortar locations. With high demand, there will be more people.

Chanel chose an alternative digital strategy to connect customers and associates. Once you have a relationship, texting can give you a direct relationship to a store and facilitate easier and quicker transactions. In other words, “people can shop efficiently.”

However, as he points out, what Chanel misses in this approach are the browsers and, we’ll add, the impulse buyers. That could very well be by design. It certainly makes it more difficult for the newer customer. 

So then, why private stores? For starters, the plan is to experiment in some cities in Asia, presumably shopping hubs. Williams says there’s a certain type of client with new wealth who sees being a VIP with an elite experience as an attractive part of shopping. But he also recognizes (as should Chanel) that while some will like it, others will be turned off, feeling they are relegated to the second class store. Just imagine the reels and Tik Toks to come on this subject!

One question raised is why not just allocate special space within an existing boutique. Truthfully, it already exists for most brands. We routinely see VIPs whisked off to a special room. Similarly, haute couture, bridal and special made-to-order items often have special places within the building. 

Of course, it remains to be seen how Chanel sets up these boutiques. Regardless, we don’t see the debate going anywhere anytime soon.

Tell us what you think about all of this?

Read more at: Chanel Announces the Opening of Private Stores for Top Clients 

The full Business of Fashion article and podcast is here.

Love, PurseBop
XO