Because of the Recent Increase in the Cost of Luxury Goods, Now is the Time to Invest in Chanel Handbags
Invest in Both Contemporary and Antique Chanel Handbags
The price of a Chanel Medium Classic Flap purse went from £1,150 in 1990 to £7,800 in July 2021, which is a significant increase from the previous price of £1,150 in 1990. As of the 3rd of November in 2021, the price of the Chanel Medium Classic Flap has increased by £800, making it a total of £8,800 for the year. The compound annual growth rate for Chanel handbags for the last 30 years has been 7 per cent, which is lower than the average for the S&P 500. However, the CAGR over the past 5 years has been roughly 10 per cent, which is perfectly in line with this stock market index. Over the course of the last five years, Chanel has steadily raised the pricing of its most popular kinds of handbags, including the Classic Flap, the Boy Bag, and the Chanel 19, which was only just introduced.
A Spike in the Cost of Luxury
When Chanel made the announcement that the cost of some of its most renowned handbags will be increased once again on July 1, 2021, it sent shockwaves across the fashion world. Because of this price rise, some Chanel bag models, like the Classic Maxi Flap, will have their prices increased by up to 15 per cent. Since the beginning of the epidemic, Chanel has gone through three rounds of pricing changes, which were characterised by this choice. The price hike that took effect on November 3rd, which was a significant rise, would be the fourth. However, the progressive rise in the price of Chanel bags is not a phenomenon that occurs in isolation. Since the beginning of the 2000s, the cost of luxuries has been increasing at a pace that is more than twice as fast as inflation. Price hikes of at least once or twice are to be anticipated throughout the course of a normal year from premium companies such as Chanel. These price increases are mostly driven by increases in the expenses of raw materials and labour. In addition, achieving price parity across all of the world’s marketplaces is becoming an increasingly important piece of the jigsaw. Infamously, the price tags on luxury goods have been notoriously set at significantly higher levels in major Asian countries like China and Japan in order to purposefully stimulate visitor spending. As the worst of COVID-19 passes, people are ready to purchase, and top luxury players are compelled to make up for missed earnings during the lockdown. The pricing modifications that Chanel is now doing are only one part of a much larger trend in the world of luxury fashion.
The Handbags of Chanel’s Bright Future
The demand for Chanel handbags, which are highly coveted and regarded as classic statement items, is always greater than the supply. As a result, Chanel will most likely continue to raise the pricing of its most desirable products, and customers will continue to buy them. Since the beginning of the worldwide pandemic, Chanel has increased the pricing of its bags by a factor of four. The first hike occurred in May of 2020, when the premium fashion brand boosted the price of a selection of handbags, including the 11.12, 2.55, Boy, Gabrielle, and Chanel 19, by anywhere from 5 to 17 per cent. After just another five months, in October 2020, Chanel increased the price tags on its handbags by an extra 5 per cent. The cost of designs like the Chanel 19 would see an extra 10 per cent increase on July 1st, while the Flap bags would see an additional 15 per cent increase in price. And as of today, November 3, both the Classic Flaps and the 2.55s are being offered at a price that is between 12 and 15 per cent more than it was only three months ago. In the words of the Chanel brand itself, “the price of a Chanel purse conveys not simply a feeling of luxury, but also our ideals.” [Cahn] When you buy a Chanel bag, you are investing in recognised expertise and French design, an unwavering dedication to preserving skills and workmanship, cutting-edge creative manufacturing, and assured provenance of the raw materials (leather, jewellery ornamentations, etc.).” It is clear that the price increase of some Chanel handbags contributes to the overall attraction of the brand since a higher price point clearly equates to an increased level of exclusivity.
As a result of the most recent price spikes, it will take years before the full worth of Chanel handbags can be determined on the luxury resale market. It seems that the days of being able to find a previously owned Chanel bag on the secondary market for a price that is lower than the bag’s retail price are already long gone, regardless of the condition of the bag. On the resale market, Chanel bags are renowned for maintaining high resale prices, and this trend is not expected to alter in the near future. Chanel is able to effectively raise prices because customers are able to relax knowing that there is a healthy market in place for them to resale their items in the event that they decide to do so in the future, thanks to the growing demand on the secondary market. As a result of continued increases in price all across the globe, it will be quite interesting to observe whether resellers are eventually able to demand premiums on Chanel handbags comparable to those of Hermès (it’s getting close!).