Disclaimer: The content of this blog post is alleged and for entertainment purposes only. It should not be construed as factual or truth. Any resemblance to actual events or persons is purely coincidental.
Chanel is undoubtedly one of the largest (if not the most well known) luxe fashion brand today. However what was once a small cluster of dissatisfied consumers is growing bigger and their complaints are becoming louder. What’s more worrying is that this decline in quality seems incompatible with the simultaneous rise in prices seen globally.
In an era where luxury brands are huge contenders in the retail sector, there’s an unsettling trend emerging – 1) declining quality of items 2) product issues are rapidly being seen, and 3) the once-unassailable reputation of this highly regarded label is being tarnished.
There is a paradox here and it needs to be explored, as it not only challenges the idea of luxury but also spills the tea on the evolving dynamics between brands and their discerning clientele.
Chanel, through its owners, the Wertheimer brothers, made an investment in The Row in September 2024 via their family office, Mousse Partners. The investment was part of a broader funding round that included contributions from L’Oréal’s Bettencourt Meyers family and other investors, valuing The Row at around $1 billion. This strategic move aligns with Chanel’s strategy to strengthen its influence in the luxury sector, potentially giving it access to The Row’s expertise in “quiet luxury” and minimalist aesthetics.
The acquisition also fits into the context of Chanel’s recent price hikes, as the brand seeks to solidify its position at the top end of the luxury market. Therefore this reinforces its commitment to exclusivity and justifies its elevated pricing, emphasizing quality and timeless value over accessibility. This strategic move helps maintain Chanel’s prestige, supporting its narrative of unparalleled luxury amid rising costs.
The Row benefits from Chanel’s vast global network, financial resources, and industry expertise, enabling it to expand its reach and grow its brand presence. This partnership also provides The Row with access to enhanced production capabilities and broader market opportunities, boosting its overall brand visibility and influence.
Reasons For Price Hikes
The luxury industry has been heavily impacted by the pandemic in 2020. The overall luxury goods market—encompassing both luxury goods and experiences—shrank by 20% to 22% (2021), and is now estimated at approximately €1 trillion globally, back to its 2015 levels.
An increase in margins seems to be an issue to stabalise Freight and logistic charge increases US – logistics via land, sea, air e.g.: 2021 – 2500; 2022 -18000; 2023 – low as 3500 Reclaiming Exclusivity and anti-democratisation of luxury purchases
The brand’s strategy seems focused on enhancing its luxury status and exclusivity, which could justify further price increases in the future. Because of the higher the price points of their flap bags, this essentially means pricing out any prospective first-time aspirational consumer, which would effectively limit the number of purchases. Or this could be a stratergy to completely price out younger consumers, who are at the very early stages of their careers and likely to have not to have the purchasing potential, and very limited earning power, compared to their more elder, financially secure and professional counter-parts.
Karl Largerfeld
Recognised as being mysterious, enigmatic and unsmiling, Karl Largerfeld has been at helm of Chanel’s creative output for many years at the brand. And has quite rightly been the most successful and important fashion designers of a generation during his career as the chief Creative Director, for Chloe, Fendi then Chanel. This most notable gift was to take well established, most recognisable fashion houses and make his subsequent designs youthful and modernised, therefore recreating Chanel’s heritage pieces for the 21st Century customer. He took tweed, pearls, gold chains, quilted handbags, two tone shoes and other staples of the brand and reimagined them, turning the conservative, dowdy aesthetic synonymous with Chanel to transform them and inject modern glamour into a more conservative look.
There has been a notable decline in aspiration and innovative design since Karl Largerfeld. Most possibly this has led to a drop in sales after his successor Virginie Viard took over the creative output for the brand. For instance after the cruise Collection 2020 there was a drop in company sales of up to 18%.
Bruno Pavlovsky, President of Fashion at Chanel, told WWD, “Price increases can become an issue when the quality doesn’t match the cost,” going on to insist that the House works hard to increase the quality and craft of its products. Pavlovsky believes that its brand loyalists will understand, despite fans continuously lamenting that the excessive price increases are not warranted, citing quality control issues and the trend towards investing in vintage Chanel instead of new.
This lends itself to the question of what high fashion is and what does it mean if, paradoxically, the craftsmanship takes a back seat. Is it the logical offshoot of capitalism, with business decisions being made aimed at generating as much revenue as possible regardless of countless controversies regarding quality issues? Or if UHNW and HNW individuals need to have something to spend their money on to create an image – will this still be the case even if luxury brands sell ready-to-wear pieces and accessories at high fashion price points however the consumer essectially pays for fast fashion items?
So therefore the company can make more $$$ by selling less?
Because these are inflationary price increases which goes above and beyond inflationary pressures in the retail market, and more specifically the global luxury goods market, post-Brexit and post lockdowns – who in reality would be able to afford Chanel’s offerings? Your nan?
