Bloomberg has taken a look into why Chanel is doing well while other luxury and accessories brands are experiencing dwindling sales. The reason--a luxury retail trend everyone's beginning to notice--is simply exclusivity.
While the luxury goods industry faces its slowest growth since the global financial crisis, customers are still splurging--but not everywhere. Brands like Chanel and Hermes are doing particluarly well.
Why? Perhaps because they're not as ubiquitous as brands like Burberry and Gucci. “We have to find the right balance for our customers” between availability and scarcity, Bruno Pavlovsky, Chanel’s president of global fashion, told Bloomberg. The brand seems to have struck the right balance this season, as everything stocked in stores in November has essentially sold out. "It was quite a surprise,” Pavlovsky said.
“What they want is to feel unique.” Chanel has fewer stores than Louis Vuitton, though its focus is still on brick and mortar locations. The brand doesn't plan to extend e-commerce beyond cosmetics, presumably because that would make them too available.
Pavlovsky seems to feel that the in-store experience is too important to the brand. “Fashion is about clothing, and clothing you need to see, to feel, to understand,” he said, while what digital initiatives are online are “more to bring the customers to the boutique than to sell instead of the boutique.”
He offered no indication of when e-commerce might launch, but it sounds like a distant possibility: “If, at the end of the day, our customers are happier, it’s fine. If not, it’ll be a mistake.”
Chanel also attributes the bulk of its retail sales to cosmetics and fragrance, which allows Chanel to "be generous when building its brand," hence those extravagant runway shows and immaculately designed boutiques.
That silly Brad Pitt Chanel No.5 campaign and its ensuing meme-ification also helped the brand with an estimated "hundreds of millions of dollars in free advertising."
What Bloomberg doesn't really mention is the effect of outspoken and sometimes controversial creative director Karl Lagerfeld, who has said that his bosses essentially let him do whatever he wants. Perhaps, when creative directors of less profitable brands are likely on much tighter leashes, there is something to be said for such a laissez faire approach. Or maybe Lagerfeld is just a genius.