Catching consumers in the market’s downturn is proving to be a challenging endeavour for even the best loved brands. Yet despite being caught in the midst of an economic storm, Chanel director Maureen Chiquet (above) does not think the party should stop. Not everyone agrees, however, that it is entirely appropriate to celebrate one of the world’s most expensive purses during a financial crisis. The New York Times said of the recent Mobile Art Pavilion exhibit in Central Park, celebrating Chanel’s infamous quilted-leather handbag, that it “might have seemed indulgent a year ago, today it looks delusional.”
Ms. Chiquet continues to brush the criticism aside. In a recent interview with The Economist she remarked, “Even during tough times, people want to see beautiful and inspirational things.” Perhaps they want to see them, but the real question is: Do they want to buy them? Chanel prides itself on being a pivotal source for luxury. The company’s prices reflect such a statement. Handbags start at around US$1,500/€1,200 and some even sell for over US$30,000/€24,000. The firm’s signature perfume, Chanel No.5, is still the world’s bestselling fragrance, selling at US$100/€80 per bottle.
It is the exclusivity of the brand that is one of the company’s biggest assets. Ms. Chiquet’s priorities are to maintain this exclusivity through upgrading and modernizing the brand. In order to establish the former, she worked to make Chanel’s brand even more exclusive and appealing to ultra-wealthy consumers. In addition, she expanded Chanel’s Luxe collection of elite offerings, which include items such as crocodile leather bags, embroidered jackets, and top-of-the-line perfumes. Modernizing the brand meant making it more relevant to younger customers. This was done by renovating Chanel’s boutiques and choosing Keira Knightley, a young British actress, as the face for Coco Mademoiselle’s advertisements.
How the financial crisis will affect the luxury goods industry still remains questionable. A recent report from Bain & Company predicts that the luxury goods market could decrease from 3-7% during 2009. Privately held, Chanel may have slightly more leverage over its rivals such as Moet Hennessy Louis Vuitton. Even so, it will be crucial that the company develops new strategies on how to spend its money; it may no longer be able to finance five advertising campaigns at the same time. The need to cut spending will force Chanel to use a more creative hand to attract consumers.
In the meantime, Chanel’s classic products continue to perform well. The sale of handbags and fine jewellery are strong mainly because customers consider such purchases as “future investments” that will never go out of style. However, Ms. Chiquet continues to push for the avant-garde. Coco Chanel made her name by taking women out of corsets and designing clothes inspired by menswear. It is this desire to redefine the limits of fashion that will be Chanel’s future. Ms. Chiquet’s insistence on opening the extravagant Chanel art exhibit is an action that attests to the brand’s traditional pursuit of the avant- garde. Even if it has been criticized as being just a big Chanel commercial, the exhibition reaches out to the public in more ways than one: It captures the timeless appeal of the brand while celebrating the inspirational relevance of beauty even as times prove difficult.
Image courtesy of Forbes.com
