People have noticed that Chanel only raised prices for handbags once in 2024, breaking their usual practice of bi-annual price increases, and there is currently no further news about Chanel raising prices in 2025. This departure from the historical pricing strategy has sparked speculation about whether the brand's leadership is responding to public perceptions of excessively high product prices. This shift in pricing strategy may also reflect a growing awareness that, as expressed by Hermès artistic director Pierre-Alexis Dumas, Chanel's handbags are indeed very expensive. One possible reason why Chanel has not raised prices could also be due to the lack of a creative director or chief designer. With six months passing without a chief designer or creative director, Chanel may face challenges in raising prices, as the brand's design, innovation, and image could be affected, thereby influencing consumer acceptance and willingness to purchase the products.

 

On March 2, 2023, Chanel implemented a significant price increase on the medium Classic Flap Bag in leather (also known as the 11.12 and iconic model), raising its price by 16% to $10,200. This price hike sparked strong opposition from customers, with many expressing concerns about the quality and comparing it to Hermès bags. The comparison between the Chanel 11.12 priced at $10,200 and the Hermès Birkin 25 priced at $10,400, with a focus on the retail price difference, has led to discussions about which one would be more preferred for purchase at this price point.
The pricing dynamics of Chanel and the shifting consumer perceptions highlight the complex relationship between luxury brands, pricing strategies, and consumer preferences in a fiercely competitive market landscape. In early January 2024, Hermès raised prices on handbags by 3.7% to 9.6%, depending on the model. The B25 in Togo leather saw the largest increase, rising by 9.6% to $11,400. By the end of March 2024, Chanel also implemented a general price increase of 5% to 8% on their handbags. The price of the 11.12 model increased by 6%, reaching $10,800. Once again, luxury handbag enthusiasts pondered whether the $600 price difference was worth choosing Chanel and wondered if prices would continue to rise.

 

When Chanel announced its financial performance for 2023 in May 2024, Chanel's Chief Financial Officer, Philippe Blondieux, confirmed that Chanel would continue with its bi-annual price increases. A second price increase in 2024 was expected, reflecting inflation in raw material costs and furthering the goal of global price harmonization. However, Chanel did not raise prices again in 2024. It could be that Chanel realized another price increase might not be tolerated by the already lagging consumer demand. In addition to the negative customer response to the price hike in March 2024, Chanel was embroiled in some mysterious events. Just days after the financial performance announcement, Chanel's then Creative Director, Virginie Viard, suddenly resigned, which may have delayed the planned price adjustments. The lack of a Chief Designer or Creative Director could impact Chanel in several ways. Firstly, the design direction may suffer as they are typically responsible for the brand's design style and direction. Their absence could lead to a lack of coherence and uniqueness in design, affecting the product's appeal and market competitiveness. Secondly, the lack of new product releases could be problematic as Chief Designers or Creative Directors are responsible for designing new products and driving innovation. Their absence could result in a lack of new product launches, impacting consumer interest and willingness to purchase from the brand. Lastly, the brand's image could be compromised as Chief Designers or Creative Directors represent the brand's creative and design standards. Their departure or vacancy could affect consumer recognition and loyalty, influencing the brand's pricing strategy and market position.
As we enter 2025, there are still some uncertainties surrounding the future of Chanel. Where will this fashion empire head in terms of creativity, management, and market operations?