Chanel, the renowned French luxury brand, has recently made a move to increase the prices of some of its highly coveted handbags. This decision comes at a time when there is strong consumer demand and low inventory levels leading up to the holiday shopping season, which only adds to the exclusivity of these products. Despite experiencing a 17.6% decline in sales last year, Chanel managed to maintain a core profit margin of around 20%, solidifying its position as one of the most profitable companies in the luxury sector.
Being a prominent name in the global luxury industry, Chanel, as well as its rival Louis Vuitton owned by LVMH, have managed to navigate the challenges brought by the coronavirus crisis better than many other retailers. As a result, they have chosen to increase prices multiple times in order to boost their profit margins. Analysts anticipate that Chanel’s revenues will experience double-digit growth compared to pre-pandemic levels in 2019.
One of the handbags that has been affected by this price hike is the Small Classic handbag, which has seen a 16% increase in price to 7,300 euros ($8,429) since the end of September. BFM TV, a French news channel, originally reported this information, which was later confirmed by Reuters through the Internet Archive, a repository of past web pages. Reuters’ analysis also reveals that another popular handbag, the quilted leather 2.55 with a golden chain, now costs 7,800 euros on Chanel’s website, compared to 6,050 euros in December 2020, representing an increase of nearly 30%.
In response to the price increase, a spokesperson for Chanel clarified that it applies exclusively to their iconic models, specifically the Timeless Classic and the 2.55. The spokesperson emphasized that, like other luxury brands, Chanel routinely adjusts its prices to account for changes in production costs, raw material prices, and exchange rate fluctuations. However, specific details regarding the factors influencing these price adjustments were not provided. The spokesperson also stressed that these adjustments are made in a manner that avoids excessive price differences between different regions.
It is important to note that Chanel’s finance chief stated in June that the company had not implemented any price increases in 2021, but this stance could change in the second half of the year as part of their policy of reviewing prices globally twice annually.
With these recent price hikes, Chanel aims to maintain its status as a prestigious luxury brand and capitalize on the strong demand and limited availability of its highly sought-after handbags. As the holiday shopping season approaches, it is expected that the exclusivity and allure of Chanel’s products will resonate with luxury shoppers worldwide.
Links:
1. Chanel Official Website
2. LVMH Official Website
