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A Classic Chanel Handbag Will Now Cost You $10,000

It’s the ultimate investment handbag, but the brand’s price increases are rapidly accelerating.

It officially happened: Chanel’s classic handbag broke the $10,000 mark in the brand’s latest price increase

“Chanel sets the prices of its bags and small leather goods according to their cost price,” a spokesperson for the brand wrote via email. “However, like the entire luxury sector, we have been facing strong inflation in the price of raw materials and production costs for several months, which has led us to adjust our prices in the boutiques.”

First released in 1955, the style was originally made with a turning clasp, devoid of any logo, and cost $220. (Adjusting for inflation, the original cost would be equivalent to about $2,479 today, according to the U.S. Bureau of Labor Statistics’ inflation calculator.) 

“[Coco Chanel] was super innovative and way ahead of her time in terms of having her own brand and creating designs that resonated with a more modern woman,” Sotheby’s Global Head of Fashion and Accessories Cynthia Houlton says. “It really has not changed much in terms of its design, and it remains relevant based on the functionality and the quality of the bag.”

Chanel’s hallmark flap design became one of the most popular accessories in history thanks to its timelessness and functionality. Karl Lagerfeld modernized the flap bag in 1983, releasing one with a double, interlocking C-C closure, then priced at $1,000 (about $3,033 today). But as the luxury market continues to heat across boutiques and resale, so does the pricing on accessories — and the price of this specific bag has doubled since 2016, according to data collected by Sotheby’s.

These types of price increases aren’t exclusive to Chanel: Dior and Hermès also adjust the prices of classic, best-selling styles regularly — “but not at the same pace as Chanel,” Rebag Chief Marketing Officer Elizabeth Layne says, noting that it has “rapidly picked up since the pandemic.”

According Layne, “between 2005 and 2015, the average annual increase [at Chanel] slowed to 5%, with the overall increase during that period reaching 70%.” However, during the pandemic, she writes via e-mail, the French fashion house introduced several price increases — “most notably, the medium Chanel Classic Flap increased by 12% from $5,800 in 2019 to $6,500 in 2020. At the end of 2021, prices went up from $6,500 to $8,800 – a 35% increase.”

Other than higher costs, what more could be pushing Chanel’s handbag prices higher? There’s the demand and limited supply. But part of it could also be about wanting to maintain a position of exclusivity within the luxury market.  

“Brand positioning also plays a role in these accelerated price increases,” Jessa Henderson, senior curator at Fashionphile, says. “In order for a luxury brand to retain exclusivity, they need to have high price positioning. Chanel has brand loyalty and the pricing power to do so.” 

Sotheby’s Houlton adds that these price increases allow for “flexibility to continue to invest in their brand and continue to think about sustaining their market position.” 

Chart: Courtesy of Sotheby’s

“Some luxury brands have experimented with discount and lower end versions of their brand. And, for the most part, none of that has worked out well,” she continues. “Most companies are looking for how to drive growth. Raising prices is a really great way to do that: It gives higher margins, and it enables them to invest in their business and continue to invest in top designers and great materials.” 

While brand-new bags see price hikes, there’s a ripple effect on used and vintage versions of the style in the secondhand market. Houlton explains how resale prices go up “at about the same rate” as retail prices. (Though condition “has a huge impact on the secondary market price… the more classic bags have retained the highest value.”) We’ll also see an increase in demand. 

“We have seen month over month searches for the Chanel Classic Flap increase by nearly 30%,” says Rebag’s Layne. “Just last year, Chanel had an 87% average value retention rate, meaning its styles average 85% or more of the retail price at resale, according to our 2022 Clair Report.” She specifically calls out the brand’s vintage Double Flap bags and vintage Dianas as trending at the moment. 

At $10,200, Chanel’s classic handbag is already up 16% in price from earlier this year — and it’ll likely only keep going up. Are these increases sustainable, or are they creating a price bubble? Can the brand go too far, or is it not going far enough?

Houlton thinks Chanel can keep raising prices as long as it doesn’t also start increasing production. 

“I don’t see a new luxury brand emerging that’s gonna take over the top slots. And if we’re talking about handbags, I don’t see another brand taking the position from Hermès, Chanel or Louis Vuitton as the most important handbag brands in the secondary market,” she says. “I think there are likely to be blips where some brands will have a super hot bag… but it’ll last for like a year or two. I think that’s kind of what we’ve seen over the last 10 years.”

There are debates stirring on social media, as longtime fans of the brand find decreases in quality despite the higher prices. For example, a video decrying “Chanel quality decreasing” has 14.4 million views on TikTok alone.

“With the pricing of Chanel’s medium Classic Flap bags becoming aligned with the Hermès Birkin and Kelly and [with] longtime Chanel fans becoming dissatisfied with the quality of newer models,” Layne posits, “brand loyalists may look to other alternatives on the primary or secondary market.”

But Henderson doesn’t think this will be an issue. “Looking at Chanel pricing over the last decade, I do believe [the increases are] sustainable,” she says. “Demand continues to outpace production, and we don’t see any signs of this slowing down.”

Chanel’s Classic Handbag in black lambskin with gold hardware is available only in the brand’s boutiques.

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Source: Fashionista.com

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