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  • CHANEL cut down price in China, do you see the trending opportunity?

    Post by : expatree

CHANEL, the worldwide luxury brand, creates a whole new meaning in recent days. Chinese consumers are lining up in front of domestic CHANEL stores to snap up items just after CHANEL officially announced since March 17, that they decided to mark down retail prices in regional China area in opposite price has to rise in European market.
Actually a strange constant phenomenon always confuses the luxury industry these years. The extreme low return of investment reflects Chinese consumers prefer luxury brand consuming in the oversea markets leading to sales loss compared to high operation cost of domestic stores. Most brand suppliers are used to expect price adjustment and control through local government policy, but this time CHANEL cannot wait and figure out the solution itself.
As usual, a handbag is 40% higher expensive in China rather than in Europe, except the impact of exchange rate fluctuations, but now it’s only 5% price gap. Might be in the past years, 50% sales volume has gone aboard against local consumption, China is becoming a big luxury showroom on the other hand Chinese consumers are still willing to pay this bill in Paris shop in couple of weeks after they had a tryout in local shop. Not limited to this, “Elegant” this image of brand value meets a big challenge against Chinese mind. It seems if Chinese consumers simply pay more attention on the price level, it gradually loses brand experience, culture, craft story and eventually nothing valuable is left, this has to say a sad result to a well-known brand with a long history, obviously CHANEL never expects this risk.
 Chanel Handbag comparison in China & Europe before/after price changes

When other luxury brands are still in hesitation to make decision, CHANEL already had taken a first step although it met internal and external resistance, to some extent it’s not a simple price discount campaign, price globalization is the majority reason in a long term strategy. As a good example, MOSCHINO follows up this trend and starts price reduction by 20% in regional China area since April 13. We believe the local luxury consumption definitely will recover due to this incentive.
I love Chanel and I can accept 5% price gap. There must be more Chinese consumers prefer shopping in domestic store, I don’t need ask for my friend to bring them from overseas anymore.” One 32 years old office lady accepted interview.
Not only the Chinese consumers, but also light luxury brands and designers welcome this decision. At this moment, FMCG and luxury industries, these occupied the majority market share in China. Because of traditional mind, public is used to classify good or not based on price benchmark, having no clear definition even without a sense of concept so that “light luxury brand” and “designer brand” are not worth buying, then it just meets niche market requirement. CHANEL’s long term strategy recalls the strength of brand power, make Chinese consumer realize the brand value, and it opens a beacon of hope to deliver light luxury and designers brands' insights into the public mind.
Date:2015-04-10 17:23:25
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