Chanel has again raised the prices of its iconic handbags in the run-up to Christmas, with its famous quilted bag 2.55 to 7,800 euros today from 6,050 last December, according to a Reuters report. The brand’s Small Classic Bag was 6,300 euros at the end of September and now costs 7,300 euros, an increase of 1,000 euros in just a few weeks.
Price increases not necessarily linked to the pandemic
Luxury brands have steadily and gradually increased their prices since the pandemic, offsetting last year’s losses and maintaining the scarcity of the market. France’s inflation rate in 2021 was 1.96%, which means that the increases do not represent the evolution of domestic prices.
Regarding the price increases, Delphine Dion, professor at Essec Business School, told BFM TV: “It’s not surprising. Chanel must have noticed that this bag was over-sold. As soon as a product becomes too accessible, luxury brands increase the price to prevent it from becoming commonplace. The worst that can make a luxury product happy, explains Dion, “is the trivialization”. According to the professor, luxury responds to the opposite logic in relation to fluctuations in the mass market.
“They are called the Veblen goods, named after the economist sociologist who theorized this effect. This means that the more their price increases, the more demand increases. Unlike conventional products for which higher prices lower the price.
Chanel’s response to price increases has been to make regular adjustments, like all luxury brands. “We regularly adjust our prices to take account of changes in our production costs and raw material prices, as well as fluctuations in exchange rates. In accordance with the commitments made in terms of price harmonization, these adjustments are made by ensuring that there is not too great a price difference between the different markets where the Brand is present / available ”, declared the company at BFM Business News.
There have been several reports this year of luxury houses raising retail prices, with Louis Vuitton adding an average of 8% to its handbags in its main markets, Challenges revealed.
While many companies have suffered from the economic impact of Covid, the luxury industry has remained resilient and robust. In 2020, Hermès shares jumped 32%, with net profit of 1.174 billion euros in the first half of 2021, up 56% compared to 2019.
Chanel’s chief financial officer told Reuters this summer that the group has yet to raise prices in 2021, but that may change in the second half of the year, in line with its policy to review prices worldwide twice a year. . The price increases went into effect this week.
Chanel’s sales fell 17.6% last year, but the private company raised the prices of some items by as much as 29% over the course of a year. Interestingly, the large variation of its classic handbag, the Maxi, kept the same price tag, costing $ 8,900 for the 2021 set.