Chanel is opening boutiques exclusively for the superrich—but shoppers may have to battle investors as its handbags have been named as one of the best hedges against inflation
Chanel will begin rolling out a number of invite-only private boutiques in Asia next year to the top level of its client base, as the brand pushes to market its exclusivity.
The French fashion house has found its latest tactic to capitalize on the inelastic, soaring demand for its goods, but seasoned shoppers may have to battle savvy investors if they want to snap up the luxury merchandise.
“We find that Chanel handbags, traditional Chinese works of art, and wristwatches offer the best inflation protection, while fine wines, modern and contemporary art, and American and Latin American art tend to suffer in high-inflation regimes,” the report said.
Chanel bags, preferably designed by Karl Lagerfeld, rose in value by 7% during normal times, and increased by a remarkable 17% in high-inflation years—with a low risk of the asset losing value, the report found.
While inflation is eating into the profits of companies marketing to lower- or middle-income classes, luxury fashion can raise the prices of its goods with little pushback or change in demand.
Chanel, for example, has raised the price of its iconic medium classic flap bag three times over 2021—each time hiking its cost by $1,000. The flap bag was being sold for $6,800 in January 2021, before being hiked to $7,800 in July, and then ratcheted up to $8,800 in November, according to investment bank Jefferies.
Chanel’s reported revenue for 2021 was $15.6 billion—a 49.6% increase from the year before and a 22.9% percent increase from 2019 levels.
Asia’s exclusive experience
The company is opening up the stores in Asia in 2023 as this is where most of the future growth of luxury lies. Asian shoppers have also placed a higher priority on an exclusive shopping experience, according to a Julius Baer report released this week.
China is “a far more important market for luxury goods and is still set to be the world’s biggest by around 2025,” the report said.
“Europeans want a quality product with good advice and aftercare, while those in Asia are more interested in an exclusive buying experience,” the report noted, adding, “This might explain why many of the most luxurious brand boutiques today are in Dubai or Shanghai, not London or Milan.”
While constantly hiking prices, Chanel has still reported a shortage of bags in the face of inelastic demand and has had to limit the number that consumers can buy in China and Paris.
CFO Philippe Blondiaux told Business of Fashion that Chanel’s “biggest preoccupation is to protect our customers and in particular our preexisting customers,” adding, “We’re going to invest in very protected boutiques to service clients in a very exclusive way.”