‘I used to see Chanel as exclusive — now it feels exploitative’

Chanel has long been considered a byword for luxury. Yet the house that Coco Chanel built is now facing one of its most challenging moments in recent memory. Chanel’s 2024 financial results reveal a luxury empire grappling with the consequences of its strategy: revenue fell 4.3% to $18.7 billion, while operating profit plummeted spectacularly by 30%. This indicates a shift in client behavior — from high-margin purchases to lower-margin items. Analysts point to two critical factors behind the decline: pricing overreach and creative uncertainty. The price of exclusivity Luxury is fundamentally about creating extreme value. Clients will only buy when they perceive that the value delivered significantly exceeds the cost. Therefore, when brands raise prices in a way that significantly changes their price positioning, they must also elevate their perceived value accordingly. Failure to do so risks losing clients and sales. Chanel deployed an extremely aggressive pricing strategy, increasing prices approximately 60% between 2020-2023 — the steepest hike in the luxury sector. The Classic Flap bag, once €5,000, now exceeds €10,000. This dramatic surge alienated even loyal customers and sparked widespread backlash online. Social media erupted with frustration, with posts on Reddit declaring, “I’m done paying two years’ savings for a bag,” reflecting a growing sentiment that Chanel has shifted from being exclusive to being exploitative. What’s more, Chanel failed to provide any tangible rationales for the scale of its price increases. In contrast, direct competitors like Hermès or Louis Vuitton adopted a far more restrained approach. While some analysts blame the brand’s 2024 results on macroeconomic pressures, Chanel’s decision to pause price hikes for 2025 suggests an internal acknowledgment of strategic missteps. It now faces a dilemma: how to maintain its aura of exclusivity while avoiding accusations of greed in an inflationary era. Social media storms TikTok has become ground zero for brand backlash. In 2021, Chanel’s $825 advent calendar debacle — dubbed “Fyre Fest” after revealing little more than stickers and plastic trinkets — racked up 12 million views and became a symbol of eroding perceived value. More recently, in April 2025, a factory tour video intended to highlight the brand’s craftsmanship backfired when viewers noted the machine-dominated production of $10,000 bags. One viral comment summed up the sentiment, “Hermès does full handmade for slightly more — this is daylight robbery.” Quality complaints have further compounded Chanel’s issues, with viral posts showcasing misaligned flaps and stitching flaws. These incidents have fueled what analysts term a “perception crisis,” undermining the craftsmanship narrative central to luxury pricing. True or not, in the realm of luxury, perception is reality — and when clients feel taken advantage of, scrutiny intensifies. Creative crossroads At the same time, Chanel’s creative direction has faltered amid leadership transitions. Recent collections under Virginie Viard drew mixed reviews, even backlash, with the lack of a definitive vision leaving younger consumers feeling cold. The appointment of Matthieu Blazy signals hopes for renewal, but analysts caution that creative innovation must align with commercial reality — a balance Chanel has yet to demonstrate. And if the house fails to restore the perception of extreme value, its recent financial report may just be the beginning of a downward spiral. Gucci’s brand collapse serves as a cautionary tale of how quickly former darlings can fall out of favor with clients. A luxury reality check That said, not all of Chanel’s divisions floundered. Beauty and fragrance thrived, with skincare sales soaring 22% in Q4 2024. Jewelry also grew, particularly the Coco Crush line, indicating that accessible price points remain viable. However, these results strengthen the assessment that Chanel is not able to create the perceived value it needs to justify its elevated price positioning. Ultimately, Chanel’s predicament underscores a sector-wide truth: even heritage brands have pricing limits. They must first create extreme value before charging a premium for it. By choosing to absorb tariffs rather than passing costs onto consumers, Chanel acknowledges the need for recalibration. As social media users note: “Exclusivity shouldn’t mean exclusion.” The brand must now reforge its identity in an era where value perception is crowd-sourced on TikTok and financial accessibility increasingly defines aspirational status. Chanel’s response will require both strategic reassessment and creative reinvention to set a precedent for luxury’s next chapter. The question remains: Can the double-C logo retain its luster when customers feel taken for granted? This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders,” and advisor to some of the most iconic luxury brands in the world. He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts in-person masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others; Daniel holds an MBA and a Ph.D. in luxury management, and has received education from Harvard Business School. Sign up for his online luxury masterclasses at the Jing Academy.

‘I used to see Chanel as exclusive — now it feels exploitative’

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Published June 02, 2025

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‘I used to see Chanel as exclusive — now it feels exploitative’