What’s Really Going On With Chanel Prices

No time to catch your breath… Or save up your cash… Chanel bag prices just keep rising. On July 1, Classics, Reissues, Chanel 19s and Boys faced price hikes. Mere weeks later, Coco Handles followed suit.

Some Chanel fans accuse the brand of being greedy… Trying to shore up profits at the expense (literally) of devoted customers. And likely there’s some truth to that. But when looking at the longer term trend of Chanel pricing along with marketing strategy, something else seems to be happening. We think Chanel is playing the long game – pushing exclusivity while building a base of younger (perhaps less affluent) devoted buyers.

Chanel Bag Prices Article Picture

@kugzz

Price Increases

Oh what a difference 16 years makes! In 2005, a medium classic flap cost $1650 at the Chanel boutique. Fast forward to July 2021 and that same bag retails for (deep breath) $7800! That’s a 373% increase. Even if you assumed an exorbitant 10% hike every year, the current price still should be $1000 less than it is now.

But in terms of absolute dollars and percentages, the largest changes have occurred since 2010, and particularly 2016. In 2016, the price for that medium classic flap was $4900. By October 2019, the price tag had risen $900 to $5800. Then in May 2020, in the midst of the COVID-19 pandemic, Chanel increased the price $700 to $6500. January 2021 saw another $300 hike to $6800. And recently, July 1, 2021, Chanel upped the price again, this time by $1000 – to $7800.

That is a 34% increase in the Chanel medium flap in the 21 months between October 2019 and July 2021. If your property taxes rose that much in that time period you’d be screaming bloody murder. If your stock portfolio did that, you’d be jumping for joy. It’s extraordinary. And it cannot all be blamed on the pandemic-related issues (despite Chanel’s saying so with respect to the May 2020 hike). No other bag, not even the Hermès Birkin, experienced anything even close!

Chanel Price Increases Since 2019

Bag StyleCurrent Prices (USD)Prices after Jan ’21 Increase (USD)Prices after May ’20 Increase (USD)Prices after Oct ’19 Increase (USD)% Increase Since Oct ’19
Mini Classic Flap (square)$4,200$3,800$3,600$3,20031%
Classic Flap Medium$7,800$6,800$6,500$5,80034%
Classic Flap Maxi$9,200$8,000$7,700$6,90033%
Chanel 19 Medium$5,700$5,100$4,800$4,60024%
Boy Bag Small$5,400$4,900$4,600
Boy Bag Medium$5,900$5,300$5,000
Bag StyleCurrent Prices (USD)Prices after Jan ’21 Increase (USD)Prices after May ’20 Increase (USD)Prices after Oct ’19 Increase (USD)% Increase Since Oct ’19
Mini Classic Flap (square)$4,200$3,800$3,600$3,20031%
Classic Flap Medium$7,800$6,800$6,500$5,80034%
Classic Flap Maxi$9,200$8,000$7,700$6,90033%
Chanel 19 Medium$5,700$5,100$4,800$4,60024%
Boy Bag Small$5,400$4,900$4,600
Boy Bag Medium$5,900$5,300$5,000

Let’s also be clear that Chanel’s oft-discussed ‘goal of worldwide price harmonization’ is largely irrelevant to this discussion. That is, unless what Chanel really meant was let’s jack up prices around the world at a super high but equal level. And maybe, in retrospect, that’s what was intended. It certainly is what occurred.

However, discussions about ‘global harmonization’ typically focused on making prices consistent around the world. Sure, there could be adjustments here and there geographically in price, so that there’s little to no financial benefit to purchasing abroad. Frankly, this strategy was particularly helpful during the worst days of the pandemic (so far) when tourism was non-existent. Consumers shopped at home – once boutiques figured out covid-safe procedures.

Marketing Strategy

In case you missed it, we are now in the year of the ‘iconic’ Chanel flap bag… Billboards, print ads, a short film, and the Chanel website blasted pictures of the double CC flap. There’s even a new social media hashtag. No longer simply ‘classic’, it’s #chaneliconic. Put another way, it’s pitched as the Holy Grail of Chanel handbags.

Read: As if It’s Not Hard Enough to Get A Classic Flap Already, Chanel Promotes the Bag Further

Perhaps this marketing push should have put us all on notice about Chanel’s intentions. What is an ‘icon’ if not aspirational and elusive? In other words – highly desired and hard to get. Like, dare we say it, the Hermès Birkin.

Apparently, judging by Chanel’s actions of late, the first step is making classic flap harder to get. It’s no secret that bags are less available in boutiques. Supply is down substantially, and we doubt it is all pandemic-related. And even if it is, how convenient for Chanel.

Fewer bags creates a ‘frenzy’ for those available. No longer can you waltz into your local boutique and expect to buy the latest hot hue. Many of the colors introduced in the latest seasons are amazing and highly in demand. With stores receiving limited quantities you practically need to be a VIP, or at least have a close relationship with a sales associate.

In fact, Chanel (supposedly) is requiring a purchase history in order to obtain a classic flap. There also are rumors of limits or quotas on the number of these bags you can purchase. Sound familiar? Like those folks at the ‘orange’ store.

@fashionxfrenchfries

To be fair, these tactics are not completely unfamiliar to Chanel fans. Particularly in the late 2000s, you had to be fast and on the reserve list for certain handbags (and RTW). And there always have been lists, especially for classic colors. The difference now is the speed with which you must commit to purchase, usually sight unseen. You might, if you’re lucky, get photos, but no opportunity to examine or ponder. 

As for the “aspirational” piece, well, we all seem to want what we cannot get! Especially for luxury items, it seems that demand is inverse to supply. Or, as supply decreases, our demand for the item increases. Hence, the Chanel frenzy.

For others, even the increasing price feeds into desirability and difficulty of attainment. As an example, think of all those people saving up for their first (or second or tenth) flap only to find the constantly moving goalpost. Saved up $5,000 but now it’s $7,000. 

The aspirational aspect also is Chanel’s entrée into a new group or generation of devoted clientele. Have you noticed the ever-growing number of small desirable leather goods created? A small vanity with chain for just under $2000. And is it ever small, just 3.1 × 3.9 × 2.9 inches. The classic flap card holder with chain for $1525, measuring just 2.9 x. 4. 1.2 inches. Absolutely adorable, even if nothing fits inside! Maybe you can’t yet afford that classic flap bag but you can have this… for now.

@elegancebyjuliet

We also should consider Chanel’s latest move to provide after-sale care. Effective April 2021, Chanel et Moi (or Chanel and Me) is essentially a five year warranty program, providing repair services for handbags and WOCs purchased at a Chanel boutique. You must show your receipt. In practical terms, if you want your Chanel flap repaired, it had better be one that you purchased yourself for retail at an official Chanel store. Bags bought from resellers (theoretically) are out of luck. 

Read: Everything You Need To Know About The New Chanel Warranty

Which brings us to Chanel’s steadfast refusal to sell its handbags (and certain other popular categories) online. Chanel’s President of Fashion Bruno Pavlovsky consistently speaks about the boutique experience and how integral it is to the brand. According to him, it cannot be recreated through e-commerce. Funny, though, how Hermès has managed with digital sales, albeit not of its Birkin or Kelly classics. 

We suggest, perhaps, a slightly different or tangential reason: control of distribution. With e-commerce, Chanel cannot ‘vet’ customers for the most in demand flap. There’s nothing to stop resellers from filling their shelves to the detriment of the most-devoted and VIP customers. Just consider what happens with sneaker drops or show tickets… ‘Scalpers’ get there first… making a tidy sum off true consumers.

Moreover, Chanel’s concern with the luxury resale market is nothing new. It has long been battling the secondary market with lawsuits against TheRealReal, What Goes Around Comes Around, and others. Allegations include market confusion, trademark infringement, false advertising and even the sale of fakes. 

On the one hand, with the plethora of counterfeit Chanel (and other branded) bags in the market, no doubt Chanel has a great interest in protecting its name. On the other hand, Chanel could be trying to shut down the resale market completely. And, on some level, we cannot blame it. It must be difficult to stand by and see others profit from your goods. If someone is willing to pay $8000 to a resale site for that $5000 Chanel flap, maybe Chanel ought to increase the price and pocket that extra $3000. 

The Long Game

So, why limit production of iconic flaps now? After all, more bags equal more money, right? That’s especially true as prices approach the five figure mark. While certainly some folks may be priced out of the market, there are plenty of others happy to spend… but if and only if the product is truly special. In other words, exclusivity and unattainability seem to be the name of the Chanel game.

In this regard, perhaps Hermès can be instructive. For years, if not decades, limited production of Birkins and Kellys caused those models to substantially increase in value, at least on the secondary market. Now part of luxury investment indices, these bags consistently score as better ‘investments’  than many other traditional investment vehicles. And with pandemic shutdowns of production facilities and boutiques, these bags became even more difficult to obtain.

Dark Gray Caviar 21B

However, not that long ago, long-time Hermès aficionados began to complain that there were too many Birkins and Kellys being made. No longer impossible to get for newbies, they surmised their collections were being devalued. The evidence: rehoming the bags was no longer (as) lucrative. Where once they received twice or more what they paid, they were lucky to break even. Even now, although you likely will break even on the sale of your BNIB B or K, exceeding that amount isn’t guaranteed… except for certain sizes and colors. Moreover, despite what may seem to be generous list prices on resale sites, those resellers often take a hefty cut. 

The lesson actually is basic economics: more supply should reduce prices unless demand rises higher. Conversely, exclusivity raises value and price. Chanel seems to be doing this by simultaneously lowering supply and increasing prices. 

Naturally, the question is whether it will work. Remember the frenzy for flaps this spring and summer. That certainly suggests the strategy is effective at least to some extent. Time will tell if it works over the long term, as colors may not be as attractive or consumers are turned off by the prices and/or the game. 

And we still wonder… does a handbag become ‘iconic’ simply by the brand labelling it so?

We’d love to hear your thoughts.

Love PurseBop
XO