Chanel plans to increase its investment in its retail network by at least 50 per cent this year as the French design house aims to secure prime locations amid fierce competition with other luxury groups.
Owned by the billionaire Wertheimer family and headquartered in London, Chanel will continue to further integrate its supply chain with fresh acquisitions, following a dozen such deals last year.
The brand has also acquired buildings on New York’s Fifth Avenue and Avenue Montaigne in Paris. Made famous by the pioneering designs of founder Coco Chanel, the company has seen rapid growth as sales hit $19.7 billion last year, a 16 per cent increase from 2022 on a like-for-like basis, while operating profits rose 10.9 per cent to $6.4 billion.
Chanel has also more than doubled its revenues and headcount over the past decade, according to Leena Nair, CEO. The brand remains one of the most resilient alongside top-tier players such as Hermès and Brunello Cucinelli, benefiting from their high-end positioning and wealthy client base. Chanel reported double-digit sales growth across all categories, with Europe and Asia growing in the high teens and low 20s, respectively, despite industry concerns about the slowing Chinese economy. The Americas saw a softer growth rate of 2.4 per cent.
After increasing its investment in the business by 83 percent last year to $1.23 billion, Chanel plans to invest even more in 2024. The brand plans to invest in the US market, which according to Philippe Blondiaux, Chief Financial Officer, is still an under-developed market for luxury based on certain wealth indicators.”
In China, Chanel is ‘under-distributed,’ with only about 18 boutiques in the world’s second-biggest economy, far fewer than some of its rivals. The brand plans to continue investing in China even though Chinese consumers have resumed traveling abroad for shopping.
Some of Chanel’s clients have expressed concerns about steep price increases. The average price of luxury goods tracked by HSBC has risen 50 per cent since 2019, while the cost of a classic Chanel flap bag has more than doubled to over €10,000. Chanel says its price increases reflect higher material costs and inflation and will maintain its current policies. Pricing contributed 9 per cent to its sales growth in 2023, with a 7 per cent increase in volume, Blondiaux says.
