Luxury cuts prices

chanel.logo

Chanel said that it would reduce prices for three of its most iconic bags – the 2.55, 11.12 and the Boy Chanel purse – in Hong Kong, China, Korea, Vietnam, Thailand and Russia. Prices will stay the same in the U.S., Japan, the U.K. and Canada, while shoppers in Europe are out of luck – Chanel plans an increase on April 8.

The price of Boy (the size isn’t stipulated) in Europe will rise from €3,100 to €3,720, while in China, it will fall from ¥32,700 to ¥26,000. For the 11.12, the European prices will rise from €3,550 to €4,260 and the Chinese prices will fall from ¥38,200 to ¥30,000.

chanel bag

“The measure is intended to reduce price differentials across countries, which have widened considerably further to the recent depreciation of the euro,” the company said in a statement.

Experts say the euro could fall to parity with the dollar as the U.S. edges closer to an interest rate hike while Europe embarks on a massive program of money printing.

euro

Chanel took its handbag prices off on its website that could mean the brand will begin “harmonizing” its global prices. Because of currency fluctuations and the decreasing power of the euro, a Chanel bag bought in France can cost as little as half of what it costs in China.

For consumers from mainland China—an important market for the luxury industry—a weak euro, in addition to hefty Chinese import duties, has made the price differential so large that it has prompted shoppers to buy their luxury goods, especially handbags, while traveling in Europe.

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Naturally, that leads to enterprising resellers who scoop up as many bags as they can in the European market to sell in Asian countries, where prices are steep. For years, Chinese middlemen, or daigou agents, have ferried items from Hong Kong and even Europe back to shoppers only too keen to avoid the mark-ups that luxury brands often place on their “sold in China” products — as well as the taxes on luxury goods in Mainland China. According to Luca Solca of Exane BNP Paribas, luxury fashion and leather products are about 60 per cent pricier in Mainland China than in the eurozone.

The reseller charges a bit of a markup and makes a profit, the buyer saves some money and still gets the bag and, the most important, Chanel loses control of its supply chain. Customers as well, try to figure out what is “real”, “fake” or “real fake”.

At the Chanel store at Shanghai’s ultra-glitzy IFC mall, dozens of people queued on Friday for a rare opportunity to buy luxury items barely more expensive than they would be in Paris.

chanelchinesequeue

It is not clear wether Chanel will start e-commerce for its bags, but keeping prices roughly equal (the goal is to vary less than 10%) globally is a huge step toward making online sales possible.

chanel shopping

Chanel’s move came after Patek Philippe, the Swiss watchmaker, cut prices by as much as 14 per cent in China. TAG Heuer, which belongs to the Paris-based LVMH luxury conglomerate, this week said it planned to freeze prices in some markets and lower them in others, including in China.

patek hermes

Both users on the Forum and shopping site Mizhattan have confirmed that Hermès probably is the next one to make a significant price increase in US boutiques before the end of the month, affecting almost all of the brand’s product categories.

Rumors hit Louis Vuitton that price increase is around the corner as well. While there isn’t a set date for this increase, many sales associates have told shoppers to expect the price hike around middle of February to early March. Similar to Hermès, the expected price increase is 6%-10%.

One opportunity for brands that cut prices is gaining market share — even if they see the exchange-rate bonus disappear.

But Mr Solca of Exane BNP Paribas said wider price-cutting could prove damaging. “The key point to retain — and a potential risk to the sector — is that more brands deciding to follow this price-cut trend would trigger a snowball effect.”

Cvetelina Aleksandrova

Source:

http://money.cnn.com/2015/03/19/luxury/chanel-handbag-price-hong-kong/

http://www.purseblog.com/chanel-bags/chanel-plans-to-align-its-global-prices-to-fend-off-resellers-and-prepare-for-eventual-online-sales/

http://www.purseblog.com/louis-vuitton/louis-vuitton-price-increase-2015/

http://www.marketwatch.com/story/chanel-acts-on-prices-as-euro-worsens-gray-market-2015-03-19

Photo source:

http://static.businessinsider.com/image/54b7fe166bb3f70e63bd40eb/image.jpg

http://europe.chinadaily.com.cn/epaper/2013-02/01/content_16192694.htm

http://media3.popsugar-assets.com/files/ons/191/1913634/40_2008/83103742.jpg

http://thumbs.dreamstime.com/z/pretty-young-chinese-girl-holding-shopping-bags-beautiful-female-model-over-white-background-33497525.jpg

https://luxurymanagement24.files.wordpress.com/2015/03/405a9-456a9485.jpg

http://www.blanc-creative.com/blanc-portfolio/winsor-bishop-patek-philippe-event/

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