French luxury house Chanel said it will increase in the prices on its handbags and some small leather goods worldwide on Wednesday to offset a rise in the cost of raw materials amid the coronavirus pandemic.
Chanel said the price increases in euros ranged between 5% and 17%, in an emailed statement on Wednesday reported by Reuters.
“The price adjustments only regard Chanel’s iconic handbags, 11.12 and 2.55, as well as Boy, Gabrielle, Chanel 19 bags and certain small leather goods,” it said.
Separately, Louis Vuitton and Tiffany & Co have also hiked prices up to 11% for limited products in South Korea, according to Pulse News Korea, citing industry sources.
The price increases come at a time when the global luxury goods sector is heading for a collapse of up to 35% this year due to international lockdowns and disrupted supply chains, according to a new study by the Bain consultancy published Thursday.
Analysts project it will take two to three years to return to 2019 global sales of around €281bn ($303bn). The forecast decline is expected to be much steeper than the single-digit drop recorded after the 2008-9 crisis.
The coronavirus crisis may well result in the mergers and acquisitions of weakened brands, the closure of single-brand stores, and reshaping of already suffering high-street stores. Earlier in April, luxury brands like Viktoria Beckham made headlines for furloughing staff and seeking government aid – a decision she later reversed after furious backlash.
While online retailers like Amazon and Alibaba enjoyed a strong first quarter due to an increase in consumer spending during quarantine, the global luxury sector has stalled.
“The psychological aspects will probably reshape these markets for good. There was already a trend toward frugality, more cautious spending and looking for deeper meaning,” Bain Partner Claudia D’ Arpizio said. “This does not mean people won’t spend money. They will spend money on brands that stand for something, that really engage them.”
The semi-annual study for the Italian luxury goods producers’ group Altagamma predicts the most dramatic drop in sales during the second quarter when they are forecast to slide up to 50%.
For the full-year, Bain is forecasting luxury sales of apparel, handbags, footwear, watches and beauty products of €189bn to €220bn ($203bn to $237bn). The degree of the year-end hit will depend on whether there are rebounds in the local markets or another round of lockdowns, should the virus peak again.
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Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.
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