Chanel, the French luxury brand, has decided to implement a pricing policy of realignment in all its markets. This operation starts with some models ( iconic bags), particularly significant for its business. Chanel has set as reference price the European one thus it may swing up or down 10% on local markets. The only exception will be Brazil because of the high import duties applied on imported luxury goods.
The impact will be very beneficial for Asian customers who will see a relevant drop in prices. For example what about the price of the Bag Boy? It could increase from 3,100 to 3,720 euros, whereas in Japan the price would go down from 32,700 yen to 26,000. This will presumably rise European sales compared to those coming from Asia.
The need to have aligned prices as much as possible across the markets, is first due to the growing importance of the travel retail channel as big source of company’s turnover and second to the favourable currency exchange rate.
This type of strategy allows Chanel to:
1) Increase sales in Europe
2) Increase the turnover thanks to higher prices
3) Enter into the e-commerce
In fact unconfirmed rumours spread around the Chanel e-commerce for the 2016. Finally even luxury brands are planning a digital strategy in the next future to keep up with the times.
What could occur?
The only risk could be the lower perception of the brand in Asia for clients who are not use to travel. But for sure the French maison has clearly in mind its core clients and as Mr. Pavlovsky, worldwide fashion director, said that prices in Japan, USA, UK and Canada will not be highly modified.