Behind The Rise Of LV And CHANEL: Market Size In The Second Quarter Or Accelerated Contraction

In May 14th, after LV announced the price increase, French luxury brand CHANEL also raised its price.

The CHANEL price increases package mainly focuses on the classic styles of CHANEL2.55, CHANEL Classical Flap, CHANEL BOY, CHANEL 19, and the last work of the old Buddha (Karl Legfred). If you are a fan of the CHANEL BOY series, you can breathe a sigh of relief, because this price adjustment, the BOY series is the smallest increase, only increased by 4%-5%, the other classic style gains are mostly between 14%-17%, and the Classical Flap series even increased by 25%.

As early as May 7th, after CHANEL released the price rise signal, although the amplitude of the Chinese market price has not yet been determined, some CHANEL stores across the country have already started a long queue.

There is an endless stream of customers in CHANEL stores in SKP shopping mall in Beijing. It is understood that mid late 5 is the anniversary celebration of SKP, but CHANEL is not involved in this event. Even so, customers who came to shopping said to reporters: "it is said that some bags of CHANEL in China will increase in price and take advantage of the increase in prices."

For the reasons why CHANEL and other luxury brands choose to raise prices, the reporter interviewed an insider, who said: "luxury brands choose to raise prices because the epidemic has caused a heavy blow to the entire luxury industry. Therefore, the brand wants to raise the profit rate and stimulate consumption by raising prices, so as to make up for the losses caused by the epidemic."

According to Bain Consulting's May 8th spring edition of the global luxury industry research report released in 2020, the global personal luxury market in 2020 is expected to shrink by 20% to 35%, and the second quarter will shrink rapidly after the 25% decline in the first quarter of this year.

In addition to CHANEL, LV has increased twice this year, respectively, in the beginning of March and the end of April. The price increase is around 5%. Before the outbreak, in January of this year, LVMH group's helper Bernard Arnaud's net assets amounted to $116 billion 500 million, which replaced Amazon founder Bezos as the world's richest man.

Although the industry believes that the CHANEL price increases are also self rescue for brands, but even without the impact of the epidemic, the price of some CHANEL bags is also increasing year by year.

In 2018, CHANEL also increased its price by three degrees on the basis of rising production costs and raw material costs.

Some people believe that investing in a CHANEL classic flip package (ClassicalFlap) is even more valuable than gold.

Data show that the price of international gold in 1990 is about 400 US dollars / ounce, and today the price is about 1742 dollars / ounce, that is, in the past 30 years, the international gold price has increased by about 4 times.

But if you spent $1150 in 1990 to buy a CHANEL 2.55 flip flask, the price has now risen to nearly $7100, up nearly 7 times.

However, some people in the industry pointed out that the appreciation of luxury goods is just a marketing gimmick for brands, and most products do not have investment value.

In particular, the secondary market price is the index that can best reflect the value of luxury goods. In the second hand luxury market, the price of unused luxury goods is generally 5-8 fold, the lowest to 70 percent off.

Luxury goods are also divided into investment luxury and consumer luxury goods. Most people buy bags, accessories, watches and so on. They belong to consumer luxury goods. If it is an investment grade luxury item, it must be a global limited amount or has been positioned as a collection product at the beginning of design.

In the auctions of Sotheby's and Christie's, limited edition clocks and limited bags are often seen. The auction price is also far higher than the retail price at that time, but the premise is that they are scarce.

That is to say, although luxury brands raise their prices annually and publicize their brand and product investment and collection value, in fact, the value of luxury goods only exists on individual products of individual brands.

In addition, the maintenance condition of a bag can completely control its collection value. According to the interface, the CHANEL 2.55 was sold at a price of US $220 in 1955. However, in today's market, the price is raised to between $3500 and US $6000 according to the maintenance condition, color and material rarity of the bags. It is pointed out that the value of Chanel 2.55 surged by 230% between 2004 and 2016. But when buying retro CHANEL 2.55, the maintenance condition is the key to judging the collectors. The wear on leather material will reduce the value of the bag by more than 70%.

Source: the author of Xi Hong City: Pan Leiyi