Chanel / Hermès: price war and sales increase

The bag war is declared! At least that’s what the Wall Street Journal thinks after the increase of the famous Timeless model by Chanel. The French House announced a few days ago that its flagship bag would go to $10,200, the same price as the Birkin 25 from Hermès. Confrontation or simple alignment?


Since the end of covid, luxury companies have been trying to get out of the crisis by many means. However, the pandemic has given way to inflation, with the cost of raw materials and energy rising and directly impacting production. To cope, the major brands are inflating their prices, sometimes considerably.


This is the case for Chanel, which, as of 2021, has begun a policy of increasing the cost of its bags.


However, the Wall Street Journal sees it as a desire to model its business practices on the pricing policy of Hermes. Indeed, since Friday, the price of the famous Timeless bag is now equal to that of the Birkin 25 of the orange House. It has thus increased from $ 5,800 in 2019 to $ 10,200 today, or + 75% in four years according to the American daily.


The house with the double C has thus aligned its most popular bag at the same level as the most sophisticated model in the luxury industry.


For the Wall Street Journal, this significant increase illustrates the fierce battle between Chanel and Hermès for the top spot in the luxury leather goods rankings, leaving Louis Vuitton and the other major houses far behind.


To justify itself, Chanel certainly invokes inflation and exchange rates, “but nowhere else have prices risen so dramatically,” notes the Wall Street Journal. Several questions therefore remain unanswered: Is Chanel trying to make its bags as exclusive as Hermès? Does the brand with the double C want to pass Hermes in terms of popularity?


With such a decision, the Parisian brand would compete with Hermes’ brand image, even if the challenge would remain difficult. Even if wealthy buyers spend lavishly, Hermes’ popularity would still be hard to beat.


The proof is in the second hand. Because today, a bag from the horse brand is worth more on resale than new. This is not the case for Chanel.


The growth of luxury around the world


This price war comes at a time when the luxury sector remains one of the areas least affected by the economic crisis. And label increases around the world are not dampening the spirits of affluent buyers who are eager for new products.


According to Bernstein analysts, luxury goods sales could increase by 25 to 35 % this year, suggesting significant gains.


According to Retviews, a company that helps companies analyze their competitors, China remains the most expensive Asian market for leather goods.


It bags from various luxury brands made in Europe are the most sought-after items there. It is therefore on the Chinese market but also in the United States that leather goods should accelerate its growth in the coming years.


Before the pandemic, Europe attracted wealthy Chinese customers because of its lower prices and therefore more advantageous on luxury products but also because the range of items was more diversified. Today, the situation has changed. The major brands are now expanding their offer in China.


Luxury brands have significantly increased their investments in China. Two of the most popular brands in China, Gucci and Louis Vuitton, have a wider range of leather goods in this market compared to France,” explains Retviews, noting that “Gucci has almost tripled the number of leather goods models in China compared to its range” available in France, while Louis Vuitton has 19% more leather goods models in its range in China than in France.”


Read also >Hermès, Vuitton and Chanel were successful in South Korea in 2022

Featured photo : © Press


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Thanks to its extensive knowledge of these sectors, the Luxus + editorial team deciphers for its readers the main economic and technological stakes in fashion, watchmaking, jewelry, gastronomy, perfumes and cosmetics, hotels, and prestigious real estate.

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