PARIS — Bad news for Chanel customers: the French luxury house is raising prices again.
Bruno Pavlovsky, president of fashion and president of Chanel SAS, said the brand was hiking the cost of its four core handbag styles and spring ready-to-wear collection by 6 percent in the euro zone, 5 percent in the U.K., 8 percent in Japan, 5 percent in South Korea and 2 percent in Hong Kong, effective on Thursday.
Its classic 11.12 bag, for instance, now retails for 8,250 euros, compared with 7,800 euros previously. The costs of the Boy, 2.55 and Chanel 19 bags have also gone up.
Prices in the U.S. and China remain unchanged. This marks the sixth time that Chanel has increased its 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 it separately raised prices for the Coco Handle, Business Affinity and Boy Bag With Handle handbags on Jan. 15.
Conscious of the growingly vocal discontent among purse aficionados, Pavlovsky spoke to WWD to clarify the brand’s strategy. Chanel introduced a price harmonization policy in 2015 that is designed to guarantee that differences between the retail prices of its products do not vary by more than 10 percent from region to region.
“Our objective is to offer the same price everywhere to limit the parallel market. It’s an important signal to our customers, because it’s a way of engaging with them in an honest way. Nowadays, there is no reason to penalize a Chinese customer versus an American customer. It’s normal that they should pay the same price for the same product,” he said.
“That’s our choice as a brand. But what that means is that if we let prices slip between Europe, for example, and Asia, we know that we are directly or indirectly feeding a parallel market, which is not very satisfactory for our point of view with regard to our local customers,” he added.
While the brand initially lowered prices in China when the policy was introduced, in most cases, it has resulted in price increases, which have snowballed since COVID-19 hit. “We raise our prices more often because of this price harmonization policy. Having said that, it’s not the only reason,” Pavlovsky said.
Since the pandemic began, Chanel has accelerated the pace of increases due partly to rising production costs, and partly to positioning. However, he denied the widespread interpretation that the brand was driving the cost of its handbags upward in order to align itself with 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 do compete with Hermès, but we are not in competition on a specific handbag,” he said.
“You can’t be the most luxurious, the most desirable brand and not have a price positioning that is high on the market today,” he argued.
Indeed, pricing power is a key attribute of luxury goods, and Europe’s biggest players have been reporting robust business.
Dior said it pushed through an average 8 percent increase worldwide on Jan. 18, while last month, Louis Vuitton was reported to have hiked the retail cost of its signature bags by 10 percent on average to reflect inflation, and rising production, raw material and transportation costs.
However, in what appeared to be a veiled dig at Chanel, LVMH Moët Hennessy Louis Vuitton chairman and chief executive officer Bernard Arnault in January cautioned against excessive price rises.
“We don’t want to give the impression, like some brands do, of heading toward prices that no longer match the economic reality of the price of the products. You have to be reasonable. We try to be reasonable so that our customers feel that they’re dealing with brands that offer them something realistic, and not something that is artificially inflated, even if the products are very beautiful,” he said.
Pavlovsky said Chanel has invested heavily in improving the quality of its handbags and making sure they meet its environmental responsibility standards. Its seven tanneries, located in France, Spain and Italy, are increasingly using chromium-free and waterless methods.
“Today, we’re investing in our bags to make them even more beautiful, using the finest 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,” he said. “We’re noticeably increasing the perceived quality of these bags.”
He added that Chanel last year increased the warranty for its handbags to five years from two years and created the “Chanel et moi” program, which offers bag maintenance and repairs.
“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 guarantee its existence for the next 20 years,” he said.