Chanel May Increase Prices Again in 2024 Despite Record-Level Revenues

By Maura Carlin, Editor

Chanel reported record-level revenues in 2023 – up 16% (at comparable rates) over 2022 results, to $19.7 billion with double-digit growth in all business categories. Double-digit growth in Asia and Europe sales offset the much-reported U.S. slowdown in luxury spending.

Yet, Chanel lovers can expect another round of price increases in 2024. According to Chanel CFO Philippe Blondiaux, the brand will continue its policy of bi-annual price increases to reflect inflation in raw materials and to achieve its worldwide price harmonization goals.

No doubt this is not what Chanel handbag lovers want to hear. Even die-hard Chanel fans criticize the brand’s multi-year spike in bag prices. In March 2023, the U.S. price of the medium Classic Flap spiked over $10K to $10,200. Barely two months ago, in March 2024, Chanel increased its bag prices roughly 6% taking the U.S. price to $10,800 from $10,200. In Europe, the latest round of hikes brought the price over €10,000 to €10,300.

Price increases, however, account for a substantial part of the brand’s recent financial success. Nine percent of the 16% growth in revenue was due to price hikes, with the increases in sales volume accounting for the rest.

Chanel Renames Medium Classic Flap Online and in Website

Questioning whether Chanel classic flaps are worth the price has become the sport of social media influencers. As the Chanel prices inch ever closer to parity with those of Hermès famous quota bags – the Birkin 25 price is $600 more than the Chanel Medium Classic Flap – many wonder “Which would you rather?” That assumes, of course, that you can buy what you like when you want it.

The effect of pricing changes is reflected in what PurseBop has termed the Birkin Premium. The Birkin Premium measures the percentage difference between one good’s value and that of another. In other words, in this instance, it details how much more expensive the Hermès Birkin 25 is than the Chanel Classic Flap. Each time Chanel prices soar, the Birkin Premium declines.

And when Chanel increased prices 6% in March 2023, the Birkin Premium returned to single digits.

Image courtesy @empressa.dc

However, as anticipated, Chanel (like other luxury brands) faces some headwinds. While revenues rose by double digits in 2023, net profits only increased by 3%. Last December, in conjunction with the staging of the Métiers D’art 2023/24 runway in Manchester, England, Chanel Fashion Director Bruno Pavlovsky foreshadowed tougher times ahead in 2024, for Chanel and the industry.

As for reports of Chanel seeking a replacement for head designer Virginie Viard, who took the helm upon legend Karl Lagerfeld’s death, Chanel affirms its commitment to Viard. According to Chanel, its ready-to-wear business grew 23% in 2023.

So, if prices for the Chanel Classic Flap rise again this year, will you be buying one? Let us know.