Opinion: Is there an identity crisis at Chanel?

The recent unveiling of Chanel’s 2024/2025 Cruise Collection has sparked significant controversy, intertwined with the brand’s recent strategy of dramatic price increases. This dual focus has led clients and observers to question whether Chanel is facing an identity crisis. While some critics feel that the brand is losing its identity, for example, by mixing a traditional Chanel suit with a hoodie, others say that the brand needs to step up its game significantly and innovate again. Comments on Chanel’s official Instagram channel about the collection, which was presented by creative director Virginie Viard, were vastly negative: “What the hell is going on? The confusion of designs and fabrics? The styling? The shoes??” was just one of the many comments. “Chanel n’est plus Chanel,” said one commentator, suggesting that the designer step down and retire. Another asks, “Why is Chanel so lazy nowadays?” Another one states, “With all due respect, but this is un-Chanelized. Don’t ruin the brand.” And given the recent price increases, one commentator added, “Chanel pro tip. When you charge thousands of dollars for clothing, the clothes need to be pretty and stylish, and the people wearing them will have personalities unlike these models. There are fashion students in their first semesters that could do better than this.” Chanel’s latest Cruise Collection, which traditionally aims to capture the essence of leisure luxury with a blend of sophistication and relaxation, this year included elements that some found to lack the iconic Chanel elegance. Critics argued that the designs veered too far from the brand’s classic aesthetics, incorporating trends that did not resonate with Chanel’s brand story. This departure raises concerns about Chanel’s brand consistency and its ability to uphold the timeless style it is known for. Over the last two years, Chanel has implemented substantial price increases, a strategy the brand defends as necessary given the significant increases in raw material costs and the need to maintain its exclusivity and high standards of craftsmanship. However, these increases have not been universally well-received, and no other luxury brand has gone as far as Chanel has. Some items, like the iconic flap bag, saw price increases of around 70%. While Chanel continues to hike prices, there have been discussions and some question marks among clients regarding the perceived quality of Chanel bags. Some long-time customers and luxury fashion critics have raised concerns about changes in the quality of materials, craftsmanship, and overall finish of the products. These concerns are often expressed in online forums, social media, and reviews, where users compare older Chanel bags to newer ones. The main issues cited include the use of less durable materials, noticeable changes in leather quality, and less meticulous craftsmanship. As a result, interviews with HNWI indicate that some long-time customers feel alienated and perceive these changes as a shift towards prioritizing profitability over client care. The juxtaposition of high prices with executions that some see as underwhelming has intensified the debate about whether the brand is losing its iconic status. For luxury brands, which rely almost entirely on intangible values to create desirability, the potential alienation of clients is always a dangerous position to be in, especially at a time when the growth of the luxury market is slowing down. Clients are increasingly preferring brands that are consistent in their brand narrative and value creation model, as well as inspiring through their creations. The need to actively create desirability was never as urgent as now. During a recent luxury masterclass tour through Asia meeting hundreds of UHNWI and having intensive discussions on the state of the luxury market, I had the feeling that the desire for Chanel was cooling, while the admiration for Hermès was clearly stated by almost everyone. Analyzing where Chanel finds itself today, there are a few critical points: One of Chanel’s greatest strengths has been its ability to remain true to its aesthetic heritage while subtly incorporating contemporary elements. Karl Lagerfeld was a genius in balancing the past and the future, and he was a master storyteller. However, the latest collection’s perceived misalignment with the brand’s core identity suggests a struggle between innovation and maintaining traditional elegance. Chanel must find a balance that respects its rich history while also embracing modernity without alienation. Chanel needs to ensure that its brand story is not jeopardized or weakened by inconsistencies but strengthened with each new initiative. The price hikes are a classic strategy to reinforce exclusivity, a critical element in luxury branding. However, there’s a fine line between cultivating exclusivity and becoming inaccessible — or even being perceived as greedy. For loyal clients, these price increases must be justifiable with parallel increases in perceived value. If the brand fails to create extreme value and desirability, it puts itself in a significant risk position. There’s a fine line between cultivating exclusivity and becoming inaccessible — or even being perceived as greedy. The current situation raises valid questions about the brand’s current identity and its future direction. While maintaining the delicate balance between heritage and modernity, Chanel faces the challenge of recalibrating its strategies to resonate with both loyal customers and new audiences. Importantly, it will be critical for Chanel not to rely solely on its past brand equity but to work relentlessly on creating extreme value, ensuring that the brand’s perceived value matches or exceeds the significant price points it commands. Addressing these concerns effectively will be crucial for Chanel to maintain its iconic position in luxury. The increased number of recently declining brands like Gucci shows how fast a success story can turn sour if the fundamentals of luxury are not managed properly. This is a cautionary tale for all luxury brands, not just Chanel. Every detail matters, especially when it comes to the brand story and its execution, and constantly creating desirability is critical. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” 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 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 masterclasses at the Jing Academy. Follow him: LinkedIn and Instagram. All opinions expressed in the column are his own and do not reflect the official position of Jing Daily.

Opinion: Is there an identity crisis at Chanel?

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Published May 06, 2024

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Opinion: Is there an identity crisis at Chanel?