Chanel announces further price increases in Europe and Asia – WWD

PARIS Bad news for Chanel customers: the French luxury house is raising its prices again.

Bruno Pavlovsky, president of fashion and president of Chanel SAS, said the brand was increasing the cost of its four main handbag styles and its spring ready-to-wear collection by 6% in the euro zone, 5% in the UK, 8% in Japan, 5% in South Korea and 2% in Hong Kong, as of Thursday.

Its classic 11.12 bag, for example, is now sold for 8,250 euros, compared to 7,800 euros previously. Prices for Boy, 2.55 and Chanel 19 bags also increased.

Prices in the United States and China remain unchanged. It’s the sixth time Chanel has raised prices since the start of the coronavirus pandemic, and the second time in the space of six months, following an adjustment last November.

Pavlovsky also confirmed a PurseBlog report that he separately raised the prices of Coco Handle, Business Affinity and Boy Bag With Handle handbags on Jan. 15.

Aware of growing dissatisfaction among handbag enthusiasts, Pavlovsky approached WWD to clarify the brand’s strategy. Chanel introduced a price harmonization policy in 2015 which aims to ensure that the differences between the retail prices of its products do not vary by more than 10% from region to region.

“Our goal is to offer the same price everywhere to limit the parallel market. This is an important signal for our customers, as it is a way to engage with them honestly. Nowadays, there is no reason to penalize a Chinese customer compared to an American customer. It is normal that they pay the same price for the same product,” he said.

“It’s our choice as a brand. But what this means is that if we let prices slide between Europe, for example, and Asia, we know that we are directly or indirectly supplying a parallel market, which is not very satisfactory to our perspective to our local customers,” he added.

Although the brand initially lowered its prices in China when the policy was introduced, in most cases this led to price increases, which have snowballed since COVID-19 hit. “We increase our prices more often because of this price harmonization policy. That said, that’s not the only reason,” Pavlovsky said.

Since the start of the pandemic, Chanel has accelerated the pace of increases due in part to rising production costs and in part to positioning. However, he denied the popular interpretation that the brand was driving up the cost of its handbags in order to match rival Hermès’ Birkin bag.

“Hermès bags are great, but I think our bags are very different. The construction of our bags is different, as are the materials. Even the way you wear them is different. So yes, we compete with Hermès, but we are not competing on a specific handbag,” he said.

“You can’t be the most luxurious, desirable brand and not have a high price position on the market today,” he argued.

Indeed, pricing power is a key attribute of luxury goods, and the biggest European players have reported robust activity.

Dior said it recorded an average increase of 8% globally on January 18, while last month Louis Vuitton reportedly raised the retail price of its signature bags by an average of 10% to reflect inflation and rising production, raw materials and transportation costs.

However, in what appeared to be a veiled dig at Chanel, LVMH Moët Hennessy Louis Vuitton Chairman and CEO Bernard Arnault warned in January of excessive price hikes.

“We don’t want to give the impression, as some brands do, of moving towards prices that no longer correspond to the economic reality of product prices. You have to be reasonable. We try to be reasonable so that our customers feel that they are dealing with brands that offer them something realistic, and not something artificially inflated, even if the products are very beautiful,” he said. declared.

Pavlovsky said Chanel has invested heavily in improving the quality of its handbags and ensuring they meet its environmental responsibility standards. Its seven tanneries, located in France, Spain and Italy, are increasingly using chrome-free and water-free processes.

“Today we are investing in our bags to make them even more beautiful, using the best materials and the latest technologies with the aim of ensuring that these bags are aligned with the CSR transformation that we want them to reflect”, did he declare. “We are significantly increasing the perceived quality of these bags.

He added that last year, Chanel increased the warranty on its handbags from two years to five years and created the “Chanel and me” program, which offers maintenance and repair of the bags.

“It’s not just a price increase for the sake of a price increase, or because of a race against our competitors. It’s because we have a valuable product and this valuable product requires real commitments and real investments to ensure its existence for the next 20 years,” he said.

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