The Debrief: Why Chanel Is Opening Private Boutiques

The Business of Fashion Podcast

The Business of Fashion

Fashion & Beauty, Business, Arts

4.6 • 770 Ratings

🗓️ 22 July 2022

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

BoF’s luxury editor Robert Williams offers insight into the surprising news that the mega-label plans to open stores dedicated to serving top customers.

Background:

As traffic to stores soars, Chanel’s chief financial officer Philippe Blondiaux said the brand plans to open dedicated boutiques for top-spending clients starting in key Asian cities. It's a strategy that emphasises the importance of big-spenders to the in-demand French luxury brand’s future amid whispers of an impending recession — but one that risks alienating first time and occasional shoppers who are still dropping upwards of $10,000 for bags.

“Brands like Chanel, they’ve lived through lots of cycles of boom and bust in the economy… When there’s an economic crisis, they need to be ready to have a real focus on repeat business,” said BoF’s luxury editor Robert Williams.

Key Insights:

Chanel sells many items in-store only, and limits locations to the most luxurious places in the world’s most luxury cities — operating just around 250 stores compared with Louis Vuitton’s over 400 doors.
Chanel is not the first brand to open special stores for private clients; Brunello Cucinelli deployed a similar concept last December. Other brands like Zegna have dedicated spaces in-store for special items.
In 2021, the company’s profits have tripled and revenue jumped 50 percent year over year.
The brand’s growth in fashion, watches and jewellery last year was driven by its decision to raise prices and a flood of new clients and first-time buyers to luxury.
In addition to focusing on its physical footprint, Chanel is pushing its beauty business, which has been historically driven by department stores and beauty retailers like Sephora and Marionnaud, toward majority direct-to-consumer.

Additional Resources:

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Transcript

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0:00.0	Hi, this is Imran Ahmed, founder and CEO of the Business of Fashion.
0:07.3	Welcome to the B.O.F. podcast. It's Friday, July 22nd. Recently, the CFO of Chanel revealed
0:14.4	to BOF that the French luxury brand plans to open special private boutiques for its top
0:20.1	spending clients.
0:21.5	Since the pandemic, traffic to luxury flagships around the world has soared.
0:26.8	And this is Chanel's way of making sure its top clients have the best experience possible.
0:31.6	But there is more to it than that.
0:33.8	This week, I'm pleased to share an episode of The Deep Brief,
0:36.6	where BOF's chief correspondent Lauren Lauren Sherman, speaks to our luxury editor, Robert Williams, to get his take on Chanel's strategy and how it fits into the wider battle for luxury customers amid a looming recession.
0:49.5	Here are Lauren Sherman and Robert Williams on the BOF podcast.
0:59.3	Music Lauren Sherman and Robert Williams on the BOF podcast. Hello and welcome to the debrief from the Business of Fashion, where each week we go
1:03.8	deep on our most popular BOF professional stories with the correspondence who created them.
1:09.6	I'm Lauren Sherman. Walk down a shopping street in any
1:13.3	major city and you'll see queues out the door of just about every top fashion brand. The lines aren't
1:18.8	entirely new. Labels like Supreme and Off White made them a part of their culture, but they've
1:24.2	proliferated since the pandemic. However, for serious shoppers, waiting can be
1:28.7	frustrating. I recently spent an afternoon in the Manhattan neighborhood of Soho, and I wasn't
1:33.7	even able to visit Prada because the line was simply too long. Now Chanel, the second biggest
1:39.7	luxury brand in the world, is aiming to solve for this problem by opening private by invitation only stores for top clients.
1:47.1	Today I'm joined by BOF's luxury editor, Robert Williams, who reported on the new strategy earlier this year.
1:54.6	Robert, it's so great to have you with me. So let's start by setting up the situation. What is exactly going on with Chanel that they
2:03.7	were in the news in recent weeks? Well, they made this announcement about the fact that they were
	...

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