Chanel’s strategy includes price increments, but no e-commerce

Chanel’s strategy includes price increments, but no e-commerce

Chanel’s strategy includes new price increments, but no e-commerce. According to Asian media, the French brand will likely increase the prices of some handbags starting on July 1st. We don’t exactly know the entity of the increase, but it does seem to have been extended to all marketplaces. The new increase will bring movement on the second-hand market, where Chanel prices have already taken off. Moreover, the resale market is the only one where one can buy a Chanel bag online. But is closing e-commerce to fashion products still a reasonable strategy?

Chanel’s strategy

According to Ladymax, Chanel’s most likely handbags’ model to see a price increase are the Classic Flap and 19 model (up 3% and 5%), along with 2.55 and Boy (for which the increase was between 8% and 9%). The news source mentions how the Classic Flap and 2.55 models have increased by 35% in the last 2 years. Pursebop, portal specialized in the resale of luxury handbags, confirmed the price increases for Chanel and writes that the price of a Classic Flap model could grow by a further 12.5%. such price increments will be effective from July 1st in the USA, and will be extended to other markets the next week. Chanel had already taken a similar step for its price tags on October 31, 2019 (between 2% and 4%), May 21st (between 8% and 12%) and in January 2021 (between 4% and 7%).

The impact on the second-hand market

The progressive increase of Chanel’s price tags seems to behave as an investment would. This, in terms, has an impact on the second-hand market. The outcome is an increase, even if lower than that experienced by Hermès, for which the average price of a second-hand bag is higher than the retail price. According to Ladymax, Chanel is the luxury brand that has had the largest price increment in the last 2 years. A strategy that is pushing clients to buy the desired product right away, to avoid paying more later on. The strategy has been effective thus far also because the brand doesn’t sell handbags and other fashion goods online.

Regarding e-commerce

Even with the -18% result of 2020, CFO Philippe Blondiaux confirmed that Chanel will not change its approach: no e-commerce. The strategy increases the exclusivity level that is perceived. “I do not believe Chanel is late on online matters. Selling on the web doesn’t comply with the brand’s philosophy – commented analyst Erwan Rambourg to BoF –. Even though the luxury brand lost ground last year, it still remains one of the most desired ones on the market due to the experience offered to consumers”.

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