During these unprecedented times, nothing is as it should seem and unpredictability rules the scene. Case in point, luxury goods and products! At the beginning of this pandemic, with people in quarantine, lock down, or simply social distancing, the human nature prevailed and demand increased for food items and medical supplies, only to fall drastically down for almost everything else, not excluding luxury items. According to economic theories, and in such cases, when the demand falls on certain items, the price should go down as well to entice people again. But what’s actually happening is the opposite; rumours that Chanel are substantially increasing the prices of their bags seem to be true!
When China eased its lockdown in April, the lines outside Chanel returned to their previous splendour, and when the rumours of an increased price surfaced on social media the brand witnessed unprecedented gains throughout the country. In Beijing, Shanghai, Guangzhou, and Hangzhou, buyers were willing to wait for a whole hour just to be able to pay for their purchases.
In the European markets, and just as quarantine restrictions were being eased up and with stores opening, Chanel hiked up the prices of its bags by approximately 17 percent and in some cases by 27 percent. For example, the price of a Chanel Square Mini in black lambskin will witness a 27.4 percent increase in Sweden, from $2,995 to $3,815 at current exchange rates, while the small classic flap bag will go up 24.5 percent. The classics were obviously hit the hardest; the Reissue model saw a 21 percent increase while the rest were increased 14-17 percent. The Boy Bag however, seems to suffer the lowest increase with 4.9 percent. In France, the price increase came into effect on May 7th, and on May11th elsewhere in Europe. The price hikes will hit the US on May 25th, however the probability of anyone grabbing a bag before then is quite low with the majority of the stores still closed down. Sources say that Chanel declined to comment at this time.
However, it was not only Chanel that aimed to increase its prices, Louis Vuitton actually confirmed to sources that the brand had to increase its prices not once, but twice in the past three months. Even though their price hikes were quite modest in comparison to Chanel with a 3 percent increase in March and another 5 percent increase in May, but this doesn’t mean that they will stop there. Their popular Pochette Monogram Metis will now cost $150 more than it did before COVID-19. Meanwhile, Gucci and Prada confirmed that they do not have any plans to increase their pricing for the time being.
Back to China, it seems that the Chinese are attempting to enforce a number of strategies to entice their consumers. The Chanel price hike rumours and implementation worked wonders for the brand and not surprisingly. Psychologically speaking, one would aim to stock up on a product prior to its price increase and it seems this holds true for luxury brands as well. In China, they have also done the opposite by seducing consumers with tempting entry-level prices on various other baubles. Dior, Gucci, Prada, Hermès, and LV are also among those pushing lower-priced items on their consumers with focused campaigns in China. Dior introduced two local Chinese ambassadors for their beauty line just last week, and the brand boasted higher sales that its counterparts especially in categories such as skincare, fragrances, and accessories.
Gucci and Prada on the other hand, have squeezed their creative juices and have focused on celebrating the 520 Chinese Valentine’s Day. The date ‘520’ sounds like ‘I Love You’ in Mandarin and despite it being of less importance than the traditional Valentine’s day but these brands did a shift in perspective to compensate their losses. Hermès weren’t immune to these tactics as well, but Hermès does it in style. It is said that they have shipped lots of rare Birkins to China and it is also said that they have made $2.7 million in sales on the opening day of its flagship in Guangzhou’s Taikoo Hui last month. On the other hand, they have also launched a WeChat mini program also on the occasion of 520 just so they can promote their more affordable products such as their silk scarves, belts, earrings, sandals, and wallets.
It is definitely interesting to see how the luxury brands are dealing with this pandemic and more interesting to witness the consumers’ reactions to such tactics. So whether Chanel hikes its prices, or Hermès brings out their prized bags from hiding, be prepared to witness much more of these marketing and psychological antics for the coming months or even years.