The luxury Parisian fashion house, Chanel, is currently implementing a price increase for certain items in its collection. This comes after a previous price hike that occurred last spring, indicating a pattern of increasing prices. The current initiative involves a 5% increase in prices across various markets.
According to information provided by Chanel to Reuters, this measure is a direct response to the current economic and health situation, specifically its impact on the exchange rates between the euro and different currencies. The brand explains that these adjustments are necessary to ensure that Chanel products are sold at consistent prices worldwide. This decision is particularly significant in the luxury industry, which has been heavily affected by the decline in international tourism.
Investment bank Jefferies indicates that the observed price increase of around 5% has been evident since October in markets like China, Hong Kong, Japan, South Korea, and Great Britain. The luxury sector in China, for example, is predicted to experience a growth of up to 30% by the end of 2020. This price adjustment strategy is not new for Chanel, as a similar operation was carried out in May to protect profit margins on bags and small leather goods. The previous price increase ranged from 5% to 17% and resulted in long queues outside Chanel stores as soon as the announcement was made.
Overall, Chanel’s decision to increase prices is a reflection of the challenging circumstances faced by luxury brands in the current global climate. By adjusting prices to account for economic and currency fluctuations, the fashion house aims to maintain consistency in its pricing structure and protect its profitability.
Useful Links:
– Chanel Unveils New Pricing Strategy
– Chanel Increases Prices by 5% Again in the Middle of a Pandemic
