After businesses began reopening in South Korea, more than 100 people lined up outside the Chanel store in Seoul this week. They weren't there for some crazy sale, they were there to get Chanel's iconic handbags at full price. That's because the full price is about to go up.
Chanel confirmed to Reuters that its handbags and other small leather goods will see a worldwide price increase of 11 to 17 percent. The news wire reported that people lined up outside the store as early as 5 a.m. to secure Chanel bags before the price increase, and the store began handing out numbered tickets at 10:30 a.m. Longer lines than usual formed in China as well, where businesses have also reopened after closures for the coronavirus.
COVID-19 hits the luxury world — The global pandemic has impacted the supply chain for numerous industries, and luxury goods haven't been spared. "In these challenging times for our manufacturers and suppliers, it is essential for Chanel to continue to support them in the best possible way," a company spokesperson told Reuters.
The price hike has already taken effect in Chanel's native country of France, with other markets across the world to follow. For now, the only items affected are Chanel's 11.12 and 2.55 handbags, as well as the Boy, Gabrielle, and Chanel 19 bags and other small leather goods.
Widespread speculation has surrounded the fate of luxury goods, as sales in the space are expected to decrease between 25 and 30 percent, according to Boston Consulting Group. Among the predictions are an increased focus on digital sales, cuts in spending for marketing and PR, and a serious reconsideration of the status quo for discounts.
Louis Vuitton is also getting more expensive — Chanel isn't the only luxury brand to announce price increases in wake of COVID-19, and it's reasonable to expect more to follow. Louis Vuitton has raised its prices in Europe and the United States, according to another Reuters story. For example, the brand's Neverfull MM Monogram bag was $1,320 at the end of October. Now it's listed for $1,500 after already increasing to $1,430 at the beginning of May.
The good news is that only the strongest brands are likely make similar moves, according to analysts. Luca Solca, a luxury goods analyst at Bernstein, told Reuters "it’s a strategy to defend margins" but that some labels wouldn't be able to handle the backlash from customers if they were to follow suit.