A Classic Flap maxi cost $3,700 in 2010: 13 years later, it has risen to $11,700, over 300% more. The Chanel case is historic and exemplary in demonstrating how the luxury strategy of steadily increasing the value of its receipts is a (very) rewarding choice
No other brand is more aggressive in raising prices than Chanel. Currency fluctuations, inflation, harmonisation, rising costs, but above all, the desire to become an increasingly exclusive brand: every motivation is good to revise the price list upwards. The latest adjustment came on 2 March 2023. These prices of the most iconic bags, such as the Classic Flap, increased by 16% in the US and around 10% in Europe.
The increase was undoubtedly not a bolt from the blue for the market. These are adjustments that Chanel has been making every six months for a few years now so that one can expect another by the end of 2023. If anything, the unknown is the size of the increase. After all, the French brand is not the only one to raise its price lists, but it is certainly one that is least shy in both the frequency and the percentage of the increase. Here, the new receipts put Chanel bags on par with those of Hermès.
The Chanel Case
Some insiders did not fail to point out that compared to the average increase of 5-6%, this time, the first round of price adjustments was 10-16%, a new high in recent years. The Classic Flap maxi bag cost $3,700 in 2010. Now it can be found in boutiques at $11,700, up more than 300% in 13 years. Several analysts pointed out to the website Ladymax. that if Chanel were to maintain the current frequency and consistency of increases, the price in China of Classic Flap bags could exceed 100,000 yuan (about 13,600 euros) by 2025 and could reach 200,000 yuan (over 27,000 euros) in 2028.
40 times as much
The auction house Sothebys, sensitive to the luxury market and in particular to handbags, reconstructs how the Chanel 2.55 handbag was first sold in 1955 for $220. Today it costs $10,200. The Classic Flap was launched in 1983 and sold for around $1,000 in the 1980s. Now to buy the same bag, on average, you need $10,200 after the price increase in March 2023. Since 2016 Classic Flap bags have more than doubled in price from $4,900 to $10,200. And according to Bagaholic statistics, between 1955 and 2022, the price of average Classic Flap bags increased 40 times.
In the last five years, however, Chanel has decisively accelerated this strategy. Of course, there have been material cost increases, high energy costs, and Covid causing disruptions to the production chain. But there is so much more to tell, to the point that one push for one increase after another may even have come from the customers themselves. As the general manager of the Hangzhou Tower shopping mall confirms, even though the price has been rising all the time, there are long queues at the door of the Chanel boutique every time new products are released.
Moreover, according to data from the luxury handbag resale platform Rebag, the average resale price of Chanel last year was 87% of the original price, compared to 75% the year before. However, while some consumers are inclined to buy a handbag to avoid the subsequent increase, another part of the customer base finds it hard to accept that the same product costs $1,000 more overnight the next morning. The frequency and secrecy of price increases have also discouraged several customers from buying. What will happen with the next increase? We will probably find out very soon.
- The particular desires of VIC and how brands fulfil them
- The endless growth of luxury and the reasons for its power
- The grey area of luxury in China and the two words that define it