Both, somewhat unbelievably, are up from 2019 numbers — in other words, Chanel is selling more products and making more money than before COVID-19. Revenue increased by 22.6% compared to financial year 2019, profit increased by 57.5%.
Handbags in particular are in such demand that the brand has raised prices several times over the past three years. Depending on where you are in the world, a Chanel flap bag costs up to twice what it cost before the pandemic.
It’s a success story with a definite advantage: selling more is more Chanel. And more Chanel isn’t necessarily a good thing when your brand is built on the exciting veneer of exclusivity. “We don’t need to sell thousands and thousands more [bags]“says Pavlovsky. “Chanel is not about being big, it’s about the ultimate positioning of luxury.”
To thwart the spread of its own success, Chanel imposed limits on its customers’ purchases. Not everyone is happy. “The customer sometimes has trouble, I understand that. But it’s not easy to make more. It’s a challenge. So there are deadlines, there are limits.
Last year, reports of these limits began to spread, first in Seoul, where a quota of one bag per customer per month was introduced to halt the proliferation of resale (as Chanel ramps up its prices, prices also increase in the secondary market). Other regions have followed: in London it’s one per person every two months, similar in North America.
In Australia, it has been reported that the most popular styles are not making it to store shelves because sellers have already assigned them to VIP customers. Although sometimes limits are waived for VIPs or customers who also buy fashion, AFR Magazine heard that a quota of two bags per year was unofficially in place.
Such enforcement measures are a difficult but necessary step, Pavlovsky says, that even VIP customers should get used to. So, were they understanding? “Some yes, some no. But that’s part of what makes Chanel so special. Who could have imagined the situation we’ve had for the past three years? COVID, then Russia. The world is changing. At Chanel, we “We have to be very clear about our next steps. It’s not about getting bigger and bigger, it’s about getting stronger and stronger.”
“We don’t need more e-commerce”
To understand a brand like Chanel, it’s important to know that it operates as if it were the only luxury fashion house on Earth. Chanel is consistent not only in producing high-quality, highly coveted products, but also in ignoring the prevailing wisdom of the time and sticking to its tweed-adorned guns.
Building mystery is what he does best. Clothes sold online? Nope. Celebrity dating? No way. NFT? Absolutely not. It’s barely on TikTok, with less than 1,000 subscribers and a grand total of zero videos.
But this, but yes, that’s what makes Chanel, Chanel. “We want the best quality, the best sophistication,” says Pavlovsky. “We don’t need more e-commerce. You have to go step by step. That Chanel has survived more than a century speaks volumes; that it survived primarily on the strength of its brick-and-mortar stores, its attachment to its heritage and its symbols, its allegiance to quality rather than mass consumption, says much more. What other multi-billionaire entrepreneur would say their company doesn’t need more e-commerce?
As other brands explore the metaverse, create digital clothing, drop collections on TikTok and partner with celebrities of the day, Chanel has discreetly reinvested in its workshops, building a new 25,000 square meter headquarters specially designed for its Métiers d’Art businesses. The 19M, in the northeast of Paris, brings together the 11 operators under contract with Chanel – but not exclusively – who carry out the embroideries, feathers, lace of the house…
When Pavlovsky talks about growth, that’s what he means. “For us, growth is synonymous with the best quality,” he says. “And it’s not easy to do. We need the best of workshops. It is more and more difficult, more and more expensive. We have more competition. training new small dishes – the “little hands” – who make the brand’s lace, leather goods and headgear, takes at least three years. Chanel is painfully aware of this.
“We have to protect our workshops and their know-how,” says Pavlovsky. “We are developing more and more artisans in all categories every year, and we are looking for young people, under 30, to join us.” Chanel’s future, Pavlovsky points out, is to protect and nurture the declining skills associated with luxury. To do this, you must allow the small dishes the freedom to work for other houses, another necessity he is happy to allow.
“If you want the best people, they have to feel like they’re not stuck up,” he says casually. “Ateliers need to feel the freedom and fresh air to create and design for other houses. Karl didn’t just work for Chanel, he was totally free to work with whoever he wanted. Virginie is a little different, but if she wanted to work for someone else, that would be fine.
It’s a remarkable admission, especially since Virginie Viard is still largely unknown, even in the fashion world. During her 3½ years in the role, she did few interviews, unlike Lagerfeld, who edited guest magazines, designed for other houses, photographed his own campaigns and was famously sublimely oblivious when he it was the press. (He once told an interviewer that he had requested a personal valet for his fourth birthday. “I wanted my clothes to be prepared so I could wear whatever I wanted at any time of the day.”)
Pavlovsky recently took over as head of the Fédération de la Haute Couture, the governing body of the fashion industry in France. Elected for a four-year term, he succeeds Ralph Toledano, the former head of fashion at Puig, now business president for Victoria Beckham.
This means that Pavlovsky is now the most powerful man in French fashion, but he is a diplomat as we speak in April, when the appointment is just a whisper, saying only that he wanted “the right person may continue Ralph’s good work”.
Losing Lagerfeld, says Pavlovsky, was “so, so difficult. It was Karl, you can’t replace him. We had worked together for 30 years. Viard’s appointment came eight days later, in what Pavlovsky calls “a fluid transition.” Virginie was prepared, I was prepared. We knew what we had to do. It was difficult, emotionally, for the organization; not everyone was prepared. But Virginie was fantastic in this capacity. She’s really become a leader, and every new collection, I think, is better than the last.
Some argue that Viard’s collections – it produces 10 a year, including cruise, ready-to-wear and haute couture – are not as important as the company’s bread and butter: these handbags hand. Pavlovsky directs this to the pass. “Virginie dares, she understands the brand,” he says. “Coming after people like Gabrielle and Karl… they are very impressive. Few people could accept that. She is more than capable. In fact, he adds, “she’s really the only one.”
Storytelling is at the heart of the company’s success, he says, and it starts with spectacular shows that are now back in full force after COVID-19 restrictions were lifted. “The fashion shows, the collections…they allow us to share not only Monte Carlo, but the Monte Carlo of Virginia.”
This year’s cruise show (in Monte-Carlo), which takes place a few days after AFR Magazine meets Pavlovsky, is “unique”, he says. “It’s not fashion week, with 20 minutes to convince. People come just for that, from all over the world. They won’t go to 10 shows afterwards. So we make it as special as possible.
This year’s beach show was overwhelmingly optimistic about the future, giving the feeling that freedom was back and should stay (surely that’s the intended message of a Chanel motorcycle helmet?).
There were tweed jumpsuits, mini shorts over racerback swimsuits and 90s-style handkerchief hem dresses paired with straw boaters. It was high summer, bustling; garments made for the delicious, heady humidity of warm nights, which to some might not seem very “Chanel” at all, given its associations of lunching ladies.
But here, says Pavlovsky, lies the very challenge the company faces: dividing the difference, always, between heritage and dynamism. Trading on nostalgia can only take the brand so far. We live, after all, here and now.
“We live hand to mouth with Gabrielle’s legacy, Karl’s legacy,” says Pavlovsky. “And it gives us the opportunity to prepare for the future, actually, because we have such a strong past. Everything we do is about the next thing.
The Fashion issue of AFR Magazine will be released on Friday August 26 indoors The Australian Financial Review.