Hold on folks. We have entered a new handbag reality. Up is down and down is up. More specifically, Chanel prices are up and Hermès is… the same. The effect of this is startling:
Shocking, isn’t it? Especially when you consider the change in the last five years. In 2017, you could secure one and half Chanel Classic flap bags for the price of a Hermès Birkin. And before that, the cost of a Birkin approximated that of two Chanel flaps.
But the tides have surely turned. In Europe anyway. This summer, Chanel hiked the price of its medium flap by about nine percent to €8990. The ostensible reason: to adjust for the currency devaluation of the euro vis-a-vis the U.S. dollar. With the two currencies virtually at parity, Americans and other non-Europeans are finding shopping bargains abroad.
To date, however, Hermès has not substantially hiked prices on its quota and non quota bags alike. Nor is it inclined to do so, at least according to a statement made when issuing its 2022 first half year results. CEO Axel Dumas said the company expects price increases to remain in the 3.5-4% range. That is consistent with its past history as well. Hermès routinely ups the tag on its bags (and other items) 3-4% annually.
Read: “Exceptional” Hermès Financial Results for First Half of 2022
So let’s look at the numbers. The Hermès Kelly 25 in Togo leather currently retails at €7400.
Birkin 30s in Epsom Retourne and Swift go for €8050 and €8450, respectively.
Obviously, these Hermès bags are all less expensive than the Chanel flap when compared in euros; the K25 by a whopping €1600. It’s a complete flip in the comparative pricing ratio – what PurseBop previously termed the “Birkin Premium.”
[A] premium or discount is the percentage difference between one good’s value and another. So in simplest terms, the Birkin Premium refers to how much more expensive the Birkin is compared to other bags. The Premium does not take into account the brand exclusivity or difficulty in acquiring a Birkin over another bag.
At this point, the premium (for these size Birkins in these leathers) is negative. Or, more simply, there is no Birkin premium! You will pay more in Europe for a medium Classic Flap bag than any of these Hermès quota bags.
Frankly, this last price hike by Chanel is a bold move, possibly alienating its own European (including French) fans. The economies there already are struggling with the lingering pandemic, energy shortages, and the war in Ukraine, just to name a few. Making its bags more expensive to its home base, isn’t going to help with sales to locals.
Unless, Europeans aren’t the target of the price hikes. Could Chanel want to dampen the traveling Americans grabbing flaps “on the cheap” in Europe? And this price increase is the way to curb the bargain-hunting?
In fact, we extensively compared the prices of a Chanel Flap bought in Paris versus the USA and the handbag math shows a total savings: $2,458.50.
Read: Buying a Chanel Classic Flap at the Flagship in Paris and the Savings
None of this, of course, addresses whether or which of the Chanel and Hermès bags consumers can actually purchase. For both brands, the buying process is just that, a process. One cannot expect to walk into the boutique and find desired handbags.
Of course, except for a few VVIP clients, this has always been the case for Hermès quota bags. More recently, it has extended to nearly everything, including non quota bags and other items. And although this scarcity may seem a newer strategy for Chanel, in reality some Classic Chanel flap bags in black have always been difficult to obtain.
Interestingly, both brands point to supply and production issues and deny intentional limitations. Bottom line, supply is limited for all, even if your wallet is flush with cash.