Despite having been on the rise for many years, Chanel was certainly not immune to the effects of the recent global pandemic with the shutting down of any in-store shopping, and its lack of a fashion-selling e-commerce platform. Some bag aficionados theorize that the constant and consistent price increases on certain Chanel styles might be an attempt to make up these losses with retail stores being open once again, while others attribute the hikes to the continued supply chain issues. Both viable theories, there's more to the spikes than just the obvious, with variables at play that have long since impacted Chanel, and all other luxury brands. These include:

• Increases in demand
• Elevated production costs (i.e. cost of materials, manufacturing/labor costs, transportation expenses)
• Pricier eco-friendly alternatives (i.e. Chanel’s leather tanneries in Europe are now using chromium-free and waterless methods more often)
• Exchange rate fluctuations across international boutiques*
• Brand repositioning within the luxury market 
  
  

*In 2015, Chanel introduced a “Price Harmonization” initiative to account for the changing market and fluctuating exchange rates. This ensures that prices in Chanel’s China boutiques are never more than five percent above the same item priced in Euros. Presently, this only known to have taken effect in Asia and Europe.

 

 

Chanel looks to move on top competitor

While a valid response to all the above stated variables, and the changing economy/state of inflation, these price increases, especially for their classic styles, are also a calculated marketing strategy. Aiming to shift the Chanel name into being a more exclusive high-end fashion house, the overall brand elevation is venturing into the Hermes price point to draw brand comparison & equivalency.

Hermes continues to make price adjustments as well, leaving a wedge between their models despite Chanel's attempts. Still, and with deliberate thought, Chanel continues to manufacture and sell more universally attainable pieces such as small leather goods (i.e. card holders and coin purses), keeping in mind lower price points for all types of customers, and creating 'gateway purchases' for potential future Chanel VIP clients.

 

Chanel ups the exclusivity

Taking another cue from Hermes, Chanel introduced their new handbag quota policy that took effect in US boutiques on June 7th, 2022. With this policy, customers are limited to purchasing only two Classic Flap Bags annually - regardless of size, material, and color. Subject to change, this system does not currently include the other highly sought-after Flap Bag styles by Chanel: the Boy Bag and the 2.55 Reissue. Although it is still unknown if or when this protocol will be instituted elsewhere, or globally, extreme increases in demand with ongoing limited supply suggests the probable geographical expansion of the quota system.

Going above and beyond to paint the Chanel brand as hyper-exclusive with an unmatched luxurious customer experience, it was reported during the summer of 2022 that Chanel plans to open private boutiques reserved for select elite clientele. Filtering out casual browsers and minimal spenders, these private boutiques will make for a more personalized and less crowded shopping experience for VIPs with an established purchasing history and a consistent relationship with their Chanel SA (sale's associate). This concept is set to launch in 2023 in Asia.

 

 

ROI & its effect on pricing

Coupled with Chanel's unwavering cult-following, implementing & planning for these types of restrictive rules and regulations has secured the Chanel Double Flap Bag as a notorious best seller on the secondary market, garnering these bags top resale value. While price increases in Chanel boutiques can directly affect the resale market (adjusted for important factors such as condition, year of manufacture, inclusions, and such), the reverse is also true with resale market having a quasi-influence on price increases in the primary market. The overwhelming interest for these specific bags and the willingness of collectors to purchase them at a premium on the secondary market when unavailable directly from Chanel, is proof enough to Chanel that they're in the clear to justify their price increases. Seemingly the promise of a high ROI (return on investment) is more than enough for those lucky few who are able to get their hands on a Classic Flap directly from a Chanel boutique.

In fact, alongside the Hermes Birkin Bag, the Chanel Medium Double Flap’s price increases over the past few years have proven them to be a reliable investment well beyond the fashion and trendiness factors. Compared to building equity in the stock market or real estate, the current trajectory of growth for these bags suggests an even higher & more-guaranteed ROI!

It is important to note that all else equal, pricing is not necessarily completely linear from the primary to the secondhand market. Bigger is surprisingly not always better when it comes to maintaining resale value and the desirability for a Chanel Flap Bag. Despite their higher price tag in Chanel stores due to the additional materials and resources used, the largest of the Classic Flap Bags - the Maxi - tends to be priced quite low on the secondary market in comparison to the scaled down sizes - especially the coveted Classic Medium.

 

With their lack of consistency across styles and locations, it remains a mystery as to how exactly Chanel calculates their price increases. While the specifics are deliberately under wraps, the certainty of continued price hikes is as clear as can be. Since the late 2010s, Chanel has implemented at least two or three price increases anually, and it is presently expected that we can expect another price increase for most Chanel products in 2023.

 

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