Chanel is reported to be “shedding” its China work force by 50 percent. Is this further indication of luxury fashion’s woes in the world’s second largest economy?

Chanel’s unmissable two level store at Hong Kong International Airport

The downward consumption pattern in China is truer now if Chanel’s latest corporate move suggests. According to Hong Kong media, the privately held luxury brand is to “shed jobs” in China, reportedly up to 50 percent of their workforce in some departments. This drastic cut is believed to be due to the fast dipping demand for luxury goods in the mainland. And also to possibly correct the impact of Chanel’s speedy expansion into China for several years now, of which the recent has been most noticeable. There are now 18 stores in the country that boasts the world’s second largest economy. As recent as last May, CEO Leena Nair told Reuters, in response to the company’s plans to open more stores in zhongguo, “the ability to scale is really important”. It was assumed she meant up. But just five months later, the decision is apparently to scale down, at least where staffing is concerned.

Chinese media reported that the layoffs will affect mostly administrative and managerial staff, with some departments apparently to face of up to 50 percent layoffs, including frontline retail personnel. Recruitment is presently halted throughout the China business. According to Hong Kong’s The Standard, “Chanel’s staff in charge said that they have not received any relevant information, and added that the company’s operation is stable.” It is also not known if the staff cut would also mean reduced merchandise in stores since there would be less individuals to manage stocks. Last month, Chanel announced that they will re-stage the brand’s cruise 2025 fashion show (first shown in Marseille, France last May, and still designed by Virginie Viard) at the Hong Kong Design Institute on November 5. It is not immediately known if that will be cancelled.

File photo: Perrier Cheng for SOTD