Chanel, the renowned French luxury group, has once again implemented price hikes on select products across Europe and Asia. This move comes after three previous price increases in 2021, and as a result, some of their iconic handbags now come with a price tag double that of pre-pandemic levels in 2019.
Luxury brands have been steadily increasing prices during the pandemic in an effort to safeguard their profit margins. Lately, they have been grappling with soaring expenses related to transportation, logistics, and raw materials, which has prompted further adjustments in pricing. However, Chanel has taken a more assertive approach than its competitors by raising prices more aggressively. Analysts suggest that this strategy not only helps offset rising costs but also serves to enhance the brand’s exclusivity.
For instance, Chanel’s small classic handbag, which is a beloved item among fashion enthusiasts, is now priced at 7,750 euros ($8,454) on their French website, indicating a 6% increase since November 2021. To put this into perspective, the same handbag was priced at 5,500 euros in January 2021 and 4,550 euros in November 2019.
According to analysts at Jefferies, Chanel has raised the prices of its iconic handbags by an average of 71% since before the pandemic began. In Hong Kong, the small classic handbag now costs a staggering 96% more than it did at the end of 2019.
Chanel contends that these price adjustments are not direct increases, but rather a means of aligning prices across their in-store offerings. They state that they have been implementing this approach since 2015 to prevent excessive price disparities between various markets. A Chanel spokesperson confirmed that their core handbags, accessories, and seasonal ready-to-wear items incurred price increases of 6% in the euro zone, 5% in the UK, 5% in South Korea, 8% in Japan, and 2% in Hong Kong. Prices have remained unchanged in China and the United States.
Jefferies also highlighted that the price gap for Chanel handbags between China and Europe has dropped below 10% following the recent price adjustments, as opposed to the 30-40% disparity witnessed with many other luxury brands.
It is important to note that price adjustments in the luxury market are not uncommon and various factors contribute to these changes. While some consumers may be disappointed by the price increases, for others it may further enhance the allure and exclusivity of owning a Chanel product.
Links:
1. Business of Fashion – Chanel Raises Prices for Some Products in Europe and Asia
2. Reuters – Chanel Raises Prices for Some Products in Europe and Asia
