At Chanel, the only way is up

Chanel Classic—the 11.12— handbag created by Karl Lagerfeld in 1983 reinterpreted the 2.55 designed by Coco Chanel in 1955, hence the name. Illustration: Just So

The house of Chanel wasted no time. The moment lockdown eases in Europe and North Asia, prices of their bags and kindred leather goods went up. What they now charge are significantly high enough that in Seoul and Shanghai (and other Chinese cities) shoppers queue at the Chanel stores to cop their favourite bags before the new prices set in. So long the queues have been in Seoul that city officials are reportedly now pondering if they should ask Chanel to close. It is amazing that despite what Seoul (or South Korea) went through, there are those who could return to the consumptive life prior to lockdown, as if their present world is reset to that time. While it is widely said that life will not be the same before the pandemic ends, for some, it’s back-to-before with such haste and vigor. Along this social emancipation, Chanel resumed operations with a swift price hike, while other fashion businesses are waking up from a nightmare, struggling with managing inventories, and pondering closure.

The rush to buy seen in Seoul is understandable. This is as much revenge as desperate spending. COVID-19 has allowed us to realise that ‘essentials’ are different things to different people. Oftentimes they have nothing to do with staples and sustenance. Chanel knows that too. Their bags, more expensive than a fridge or a PC, are as essential now as before, perhaps even more—the apparent result of pent-up demand and aching despair. Sales, therefore, will likely be bloated than dented. Yet, making them dearer seems like a good strategy, never mind that Chanel will continue to sell the same quilted bags for many years to come. The 2.55 and its later reincarnation the 11.22 (also called the “Classic”, re-imagined by Karl Lagerfeld in 1983, the first year of his tenure), for examples, wouldn’t go out of fashion and will continue to sell in the multitude for decades to come. Regardless, a price increase is deemed necessary as if the cash cows shall be no more, as if two months of store closures will bring the great house down.

Chanel at Takashimaya Shopping Centre shortly before the Circuit Breaker

According to Chanel, as quoted in the press, “The price adjustments only regard Chanel’s iconic handbags, 11.12 and 2.55, as well as Boy, Gabrielle, Chanel 19 bags, and certain small leather goods.” And the purpose of the exercise? “These adjustments are made while ensuring that we avoid excessive price differentials between countries, in line with our commitments regarding price harmonization.” We are not in the luxury business, so we won’t know with certainty if that justification makes sense. But the timing of these “adjustments” seems add odds with the prevalent consumer mood. It sounds insensitive and opportunistic, more so when Chanel’s brand value this year, according to the annual ranking BrandZ Top 50 France, is worth USD43 billion, below number one Louis Vuitton’s USD$53.4 billion. For many average (if that’s not belittling) Chanel customer, it’s quite unfathomable that Chanel, with USD11.12 billion worth of sales in 2018, can’t stomach two months of no sale and attendant costs without resorting to making their popular products more expensive. Or is that naive?

“Harmonizing” of prices is, of course, not new. Chanel, proud of its practice and considers itself a transparent pioneer in this area, typically adjust their prices bi-annually to, according to the brand, “avoid excessive price differentials between countries”. We do not know of the percentages of past adjustments, but the current highest of 17% (in Euros) is described by some observers as “audacious”. Chanel, of course, can afford not to be cautious or modest. They are a luxury business. However, years before earnings were first announced in 2018, it was known that the privately-owned company made “subtle adjustments that were reflected on the price tags, not announced like that”, as an industry veteran told us. Welcome, we hear many say, to the school of Apple retail.

Despite the long queue outside Chanel, it’s always relatively calm inside—more conducive for bag buying regardless the price

No matter how the news broke, the surprise and dismay to many were palpable online. The common refrain, as uttered by an English YouTuber known for her unboxing videos, is that it “feels like the most insensitive time to be whacking your prices up, particularly by such a large amount.” What’s intriguing is that it’s not as if Chanel was not able to anticipate the quick return to form. There was already indication that their bag business was probably not going to be affected severely. It would bounce back. On 6 April, the day before our city went into lockdown that is euphemistically called Circuit Breaker, a snaking line was seen outside the Chanel store at Takashimaya Shopping Centre. The demand then was Circuit Breaker-defying and it’s not unreasonable to assume Chanel wouldn’t lose its brand value and ranking when social distancing measures are eased or lifted. Price hikes of anything on any day is hardly welcome news. Chanel’s prices, like those of its competitors, are expected to climb, but during an inadequately mitigated pandemic, with the very real threat of a second wave of infection, the increases smack of corporate indifference.

Diehard fans and those referred to as “elite customers” (presumably with direct access to a VIP room than the need to join a queue) will probably take the new prices in their stride, but others are miffed. It is understandable why people are. As one designer told SOTD, “it will only impact those who save their lunch money to buy the bags. The rich cannot be bothered, I’m sure.” The British YouTuber, too, said, “There’s so much uncertainty: People might have lost their jobs, people are not on full pay, people who are self-employed in the UK not getting any help… of all the times to put your prices up, now is not it.” It is doubtful that in deciding to raise their prices, Chanel had considered the jobless, those who suffered pay cuts, or the income-insecure part-timers. Which stirs the speculation that the brand is trying to weed out a particular group of queue-willing fans. If you have to worry about keeping your job or buying your next meal, Chanel is really another planet.

Photos: Zhao Xiangji