The Ultimate House of Luxury
The Ultimate House of Luxury, defining style and creating desire, now and forever.
The goal of CHANEL’s business model is to create “The Ultimate House of Luxury, defining style and creating desire, now and forever.” In a market where the word luxury is used freely on everything from Kia commercials to $300 Michael Kors handbags, CHANEL’s operations model is what truly sets them apart as the leader in the luxury industry.
CHANEL has three different product areas: Fragrance and Beaute, Watches and Fine Jewelry, and Fashion. The goal is the same for all areas with a consistent message focused on the history and heritage of Coco Chanel and the brand history.
For the fashion business, CHANEL ensures that every operating decision reflects the desire to provide a luxurious experience along with the products of the highest quality. Starting with the design process and then initial reveal of each collection, the operating model always presents a cohesive theme with a story attached that connects back to the legacy of the brand. Collections are introduced to the public with an elaborate show where the Grand Palais in Paris may be turned into a CHANEL supermarket or a CHANEL airport. Other shows are at exotic locations like a previously empty island in Dubai that is built up for the show.
After the show, pieces are produced in a very particular, quality oriented process. To ensure quality, CHANEL has purchased some of its suppliers such as Barrie Knitwear (purchased in 2012) who provides cashmere for CHANEL products as well as many of its competitors. By owning Barrie’s, CHANEL ensures that the quality is always up to the company’s standards, and that CHANEL products get priority in terms of production.
Once the items are in the store, CHANEL ensures a luxurious experience that makes each customer feel special. Stores like the one on Newbury Street have gallery quality artwork and lavish dressing rooms. CHANEL also partners with its department store partners to make sure that these stores meet the same standard of excellence as the CHANEL boutiques both in appearance and in terms of service so that the customer gets the same experience regardless of where they are purchasing.
During the selling process, fashion advisors share the heritage or the brand and the story behind each product highlighting the details of the production process and how the brand fits into both the collection and the overall CHANEL story connecting back to some of Coco Chanel’s original designs.
When the recession hit and many “luxury” retailers got nervous, they decreased their prices to make sure they met targets. CHANEL stayed true to its heritage and increased their prices as they normally would. While many other brands sell online through their own sites or through retail partners, CHANEL has yet to sell handbags, shoes, or ready-to-wear online since so much of the experience is dependent on being in the store and learning about be the story behind the whole collection.
CHANEL considers itself the leader in the industry in terms of fashion, luxury, and service. The operating decisions that they have made regarding their social media presence highlight the exclusivity of the brand and its status as the industry leader. The CHANEL twitter account has 10.1 million followers, but follows no one. Similarly, the Instagram account has 8.5 million followers and follows no one. As the Ultimate House of Luxury, CHANEL is never a follower. This is true whether it be in terms of trends, quality standards, or e-commerce decisions.
By ensuring a consistent high level of quality in the design, collection reveal, and shopping experience, CHANEL is able to achieve its status as the Ultimate House of Luxury. Unaffected by outside influences, all decisions are made based on what is best for the brand and the heritage of the brand.
References:
WWD October 17, 2012: “Chanel Acquires Barrie Knitwear”
Other information is from my own observations
Image from http://www.harpersbazaar.com/fashion/fashion-week/news/a12425/chanel-spring-2016-airline-runway/
Great post! It is was interesting to hear about the alignment between the collection story and the design of the fashion show. I did not realize that CHANEL ensures quality by integrating with producers. Has it done this with any producers other than Barrie’s? I would be curious if the company also restricts production quantity to add to the allure of the luxury status. Staying true to brand heritage is key for luxury retailers and the manner in which CHANEL has maintained this in the digital world is remarkable.
Thanks Elizabeth! CHANEL also owns a few of the ateliers that focus on some of the very specific crafts that are used in things like costume jewelry and button making where the skills are very specialized and artistic putting them at risk for extinction if no on ensures that the skills are passed down. Similar to Barrie’s they can still supply to other companies, but CHANEL wants to make sure that these techniques are preserved over time. This is an old article but it shows some examples of some of them and the work that they produce. http://www.wsj.com/articles/SB10001424052748704071704576277510621573864
Production is “restricted” on basically everything as the company does not produce based on demand and limits the quantity that a customer can purchase for certain items as well. Some pieces take like 100 hours to make so just by virtue of the times spent they are “restricted” in quantity.