Chanel CEO says price rise was driven by inflation and craftsmanship

Chanel’s CEO defended the luxury brand’s prices after it increased the cost of one of its best-known bags to more than 10,000 euros ($10,725).

The French luxury brand considers inflation and its high standards of materials and craftsmanship when setting prices, CEO Leena Nair told Francine Lacqua of Bloomberg in an interview with Leaders With Lacqua.

“We use exquisite raw materials and our production is very rigorous, laborious, artisanal – that’s why we increase our prices in accordance with the inflation we see,” said Nair.

Luxury brands like Chanel have been in the spotlight in recent years for raising the prices of their often coveted products. A classic medium-sized Chanel bag, for example, surpassed the €10,000 limit for the first time in Paris last month.

Chanel serves more affluent consumers like Hermès International SCA and Rolex. The purchasing power of these consumers typically remains resilient in the face of slowing economic growth or geopolitical turbulence.

Nair said the brand, founded more than a century ago by Coco Chanel, is seeking “sensible and modest growth” as it focuses on preserving the quality of its products over the long term – an approach that is facilitated by its status as a private company.

Nair, a former chief human resources officer at Unilever Plc, became CEO of Chanel in January 2022. She reiterated that the company has no plans to go public. Chanel is owned by billionaire brothers Alain and Gerard Wertheimer, whose fortunes are estimated at $50 billion each, according to the Bloomberg Billionaires Index.

Founded in Paris but based in London since 2018, Chanel reports its financial performance once a year, usually at the end of May. Revenue increased 17% to $17.2 billion in 2022.

The company seeks to harmonize its prices globally and sometimes adjusts them in different markets to ensure this, Nair said. “Our customers should not experience excessive price differentials. No matter where they shop, we want to be fair to them everywhere,” she said.

Copyright Bloomberg and Fashionnetwork.com