Huge queues form outside boutiques after Chanel cuts prices in China
Following the harmonizing of its global pricing
After its recent announcement that it was harmonising global pricing following the flailing euro – which has fallen 24% against the dollar in the last 12 months – huge lines have started to form outside Chanel's boutiques in China according to recent reports.
Chanel's price cuts in China have led to a frenzied reaction from fans and clients, who immediately hit the French luxury brand's stores in the country following the news – leading to some extra long queues.
According to the Business of Fashion, there were over 40 people in line at a time, with some being turned away empty handed as products sold out.
The weakening euro meant that Chanel's price gap (along with other European luxury brands) was at a record high, especially in China. Some pieces were over 70% more expensive than in Europe, which of course means that the lucrative Chinese market turned to shopping abroad.
According to HSBC, few luxury brands are likely to follow Chanel's suit. Luxury analyst Antoine Belge said price changes would likely happen for listed companies, though not to the extent of privately held Chanel, which is “leading the way.”
“We are not convinced many other brands would significantly increase price points short-term as there is a risk of alienating what little is left of local European consumer interest,” Belge wrote in a research report that was published on Wednesday. In his mind, the “benefit of the weaker euro in terms of profits is far greater than issues around pricing,” estimating the positive exchange rate effect at the EBIT level will be around 30 percent “spread over 2015 and 2016 depending on hedging strategies.”
Chanel's global harmonising will roll out worldwide on April 8.