Will a Chanel Handbag Shortage Only Fuel Demand?

    2021 has been good to Chanel. There’s been a great demand for handbags, causing shortages, and three price increases in China. But will 2022 be as kind?
    2021 has been good to Chanel. There’s been great demand for its handbags, causing inventory concerns, as well as three price increases in China. Will 2022 be as kind? Photo: Shutterstock
      Published   in Profile

    What happened

    Chanel handbags are hard to come by — or so it seems. The Maison’s president of fashion, Bruno Pavlovsky, stated that Chanel has not put new quotas on selling in any country, claiming that the company had a very good year and simply did not have enough products to sell. This comes after reports from Korean and Chinese media that stated Chanel had limited the number of bags consumers could buy over a one-year period.

    Despite the ongoing pandemic and the frequent price hikes, “the company enjoyed double-digit growth in each country with loyal customers, even if tourism was up and down,” noted Pavlovsky. However, will the shortages in certain markets, like China, only fuel stronger demand for the French brand, and with it, continued price increases?

    The Jing Take

    Chanel’s president of fashion foresees a bright future for the Maison’s business, despite COVID-19 restrictions. “2022 can be good from a business point of view but very difficult from a day-to-day point of view as you are dependent on sanitary conditions. It’s a great unknown,” conceded Pavlovsky on a recent Zoom call. Yet, the ongoing pandemic may not be the only worrying factor for the company.

    Chanel’s frequent price increases — three times in 2021 — have been alarming to its local Chinese customers. For example, the last price hike increased its Small Classic Flap bag to 8,250, overtaking the Hermès Kelly bag at 8,000. As such, many netizens stated that they would be more than willing to purchase an iconic Kelly bag given the same amount of money.

    This follows the hot C-drama show, Nothing But Thirty, where the show’s main protagonist, Gu Jia, successfully enters a high society circle thanks to an Hermès bag (she was rejected earlier by the very same group when sporting a Chanel handbag); clearly, Hermès has greater social currency on this show.

    A scene from the popular Chinese TV drama series Nothing but Thirty demonstrates how Hermès tops the luxury brand hierarchy. Photo: Tencent Video
    A scene from the popular Chinese TV drama series Nothing but Thirty demonstrates how Hermès tops the luxury brand hierarchy. Photo: Tencent Video

    Meanwhile, Chanel has also been embroiled in an online backlash over its limited edition Advent calendar, which the company responded to in an interview, “This controversy is a bit of a shame because it was not what Chanel intended. Chanel thought it would please some of its customers by offering this type of product. Evidently, we see that you have to be careful and therefore, in future, we will certainly be much more cautious.”

    Still, the brand has lots of strong assets, like its most desirable signature pieces and the iconic figures of Coco Chanel and Karl Lagerfeld. However, the shortage of products — no matter what the cause — might only fuel demand no matter the price. But, if Chanel would like to build on its 2021 success in China and beyond, it would help to resolve their supply issues as well as keep its pricing in check, or perhaps, offer a lifetime warranty as Hermès does to increase value.

    The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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