Chanel raises prices again, sending price tags up 15% or more for some bags
Chanel has increased its prices twice during the pandemic. First, he noted an increase of between 5 and 17% on some bags in May 2020, citing an increase in the cost of certain raw materials and “the consequence of recent large fluctuations in exchange rates between the euro and certain local currencies “. The famous fashion brand continued with another 5% increase in October 2020, in line with a broader trend that has also seen some of its rivals, including Louis Vuitton, Dior and Gucci, raise prices (and protect margins). amid the COVID-19 pandemic. Now, Chanel is following up on Philippe Blondiaux’s recent claim that prices could rise again, with Chanel’s CFO saying last month that another increase could stem from the two ‘worldwide pricing policy. times a year “from Chanel.
The increases, which take effect on July 1, raise the price of models like the Chanel 19 Small bag by 10%. While on the more aggressive end of the spectrum, Chanel’s Classic Medium and Classic Jumbo Flap bags are expected to rise nearly 15 percent to $ 7,800 and $ 8,500, respectively, while the Classic Maxi version will cost 9,200. $, which equals 15 percent. After.
Chanel’s persistent price hikes have made at least some consumers hesitate, with the Korea Times saying on Wednesday that “some say they are no longer interested in buying Chanel products citing the sky-high prices.” However, not all Chanel fans reacted that way. “Others say they plan to do an ‘open run’, which means customers line up before opening hours to rush inside when the store opens to pick up items that they need. ‘they want,’ according to the site’s Yoon Ja-young, who said that “the number of people queuing outside the Chanel store in downtown Seoul on Monday morning appeared to be twice as long as usual,” after that rumors of an impending price increase have started to circulate.
The same was true in May 2020 when consumers in China and South Korea lined up outside Chanel stores as soon as rumors of impending price increases began to circulate on social media, according to Reuters, which reported. highlighted the risk associated with constant and substantial risk. prices are rising, because – again – in this specific rising price scenario, a certain segment of consumers have said they would avoid Chanel’s increasingly expensive offers, presumably in favor of its competitors.
And yet there are other consumers who will likely continue to shell out for Chanel bags despite constantly inflated prices, especially as wealthy shoppers around the world are spending more money given travel restrictions and limitations. social activities related to COVID, activities they would otherwise have spent money on during the pre-pandemic years. With international travel largely out of the question, Kim Yae-ri, professor of digital marketing at Sejong Cyber University, told the Korea Times that “people seem to be turning more to luxury goods, which they see as symbols representing their identity. “Luxury brands like Chanel are well aware of this,” she says. “They know that people will continue to buy their products even if they increase the prices.
But even though some luxury names may have raised prices amid a global pandemic, and even though consumers have been willing to pay as a result, there can be a sticking point for even the most willing luxury shoppers. which raises questions about the duration of this global surge. raising the price tags may continue. Analyst Luca Solca addressed this potentially glaring problem in Bernstein’s “Untapped Price Augmentation Reservoir” report last fall, stating that “experts fear that if prices continue to inflate at this rate, luxury brands may fall. having to implement “painful corrections”, and simultaneously, [risk] erode brand value in the process.
As for the potential winners of Chanel’s price hike scenario, Flavio Cereda of Jefferies said in a note Thursday that the price hikes “are good news for [Chanel’]s peers in leather and in our opinion, in particular for Dior as the closest competitor ”, because brands in a similar situation are now able“ either to follow their own price increase, or [to] pick up customers whose price might be overpriced Chanel bags. Brands also stand to gain as brands increase the price of their most coveted offerings: luxury resale companies, such as Vestiaire and The RealReal, the latter of which currently offers a selection of over 2,000 Chanel bags, and lists Chanel among the brands that maintain “highest resale values”.
That’s not to say that consumers will get great deals on these bags – which RealReal calls “smart investments” – even on resale. On The RealReal’s e-commerce site, for example, an average classic double flap bag with tags costs $ 8,000; at the time of writing, this bag was among the flap bags that were found in consumer carts. Meanwhile, an average 2020 classic double flap bag in “very good” condition sells for $ 7,500.