CHANEL is a fantastic example of how Luxury brands manage to “grow without losing the glow” (quoting Erwan Rambourg). This means, strengthening financials while protecting their pure Luxury approach. Not a surprise: the brand has just posted its highest revenue, cash flow and operating margin, profits skyrocketing 171%.

THREE core directions that Chanel is following to protect its Luxury status:

Luxury brands master in delivering exclusive experiences. Chanel has just announced that is working to open private boutiques for its VICs (Very Important Clients). “Our biggest preoccupation is to protect our customers and in particular our pre-existing customers,” CFO Philippe Blondiaux told The Business of Fashion. “We’re going to invest in very protected boutiques to service clients in a very exclusive way”

Luxury brands have end-to-end control over their value chain. Chanel’s M&A strategy remains focused on vertical integration of the supply chain. They have already acquired 46 companies to develop their expertise. “We have today a number of acquisitions in the pipeline to continue to develop this unique network”, said Blondiaux to Vogue Business. As an example of localization, Chanel bought up more jasmine fields in Grasse, to safeguard iconic Perfume No. 5.

Luxury brands always increase prices. Chanel famously increased the prices of its iconic handbags last year (the small Classic Flap bag rose by an average of 21 per cent in 2020 and a further 30 per cent in 2021). A twice-year price adjustment is a norm for the brand; this was not changed during the pandemic.

Chanel’s other focus in terms of M&A is innovation in sustainable materials, while in relation to Web3, “we are watching carefully, but it’s still too early to know how it will impact our business model going forward”, Blondiaux says.

High-end brands, when consistently applying luxury core principles to their business models, are able to go beyond resilience and develop antifragility.

Sources: Vogue Business, The Business of Fashion.