Chanel: Equal Rights For Chinese Consumers
Giulia Lina Callegari and Alexander Hanson-Smithon 19 March, 2015 at 05:03
It was about 6 months ago that Salvatore Ferragamo’s CEO Michele Norsa said in an interview with Bloomberg that he was planning to raise the brand’s prices in Europe and Hong Kong, because the difference with the prices for Chinese consumers was too high: “China will remain a great opportunity for luxury brands and it will be our central market for Ferragamo in Asia”.
It therefore comes as no surprise that Chanel is planning to do something similar starting this April: equalising the prices between Europe and rest of the world – starting with 3 of its iconic products only. Products will be available for purchase at the same price all over the globe (except for Brazil, constrained by high export duties).
On average, products in China are over 20% more expensive. So if we look at a handbag priced at 5.000 Euros in Paris – it would cost around 6.000 Euros in China. A shopper planning to purchase two products can cover a business class flight just from the money saved as a result of price discrepancy! This difference has generated many flourishing ‘private shopping’ businesses in China, with people offering to buy abroad for groups of locals and websites shipping to China from other countries.
Price harmonisation would seem to reveal Chanel’s plan to expand it’s eCommerce offering soon. Even though Bruno Pavlovsky told WWD: “It’s to prepare the brand for the next 10 to 15 years. It’s more about the future than the past. One day we will probably sell online, but we will do it when we are ready,” he said. “Our products need to be touched, tried, experienced. We can’t at the moment do this online.”
As a result of price point harmonisation Europe will see products become more expensive, while in Asia prices will be lowered. Taking the Boy Bag as an example, it could go from its current 3.100 Euros price to 3.720 Euros, while in China it would go from 32.700 Yuen to 26.000 Yuen. Prices in Japan, Canada, UK and the US shouldn’t see a dramatic change as most of the countries are already aligned.
Bruno Pavlosky told WWD: “We want to focus on clients which are fascinated by our brand, its creativity, our know how and the finishing and not by the price difference”.