Analysis: Spotlight on Luxury Prices as Chanel Embarks on a New Chapter

**Chanel’s Top Designer Exit Stirs Luxury Fashion Industry**

In a surprising turn of events that has sent shockwaves through the luxury goods sector, Chanel’s leading designer Virginie Viard announced her departure early Thursday. This move has sparked widespread speculation and concern across the $1.62 trillion industry, which is currently navigating a critical juncture.

Viard, who stepped into the role following the death of the iconic Karl Lagerfeld in 2019, has been celebrated for her contributions to the brand, particularly her modern takes on Chanel’s signature tweed ensembles. Her exit raises questions about the future direction of Chanel, the world’s second-largest luxury label, which reported a robust 16% sales growth last year, bringing its revenue to nearly $20 billion.

The luxury fashion playbook, heavily reliant on marketing new styles from high-profile designers and significant retail price increases, may be at a crossroads. Major luxury brands, including Chanel, Louis Vuitton, and Dior, have seen an average product price hike of 33% since 2019, contributing to half of the industry’s organic sales growth over the past two years, according to RBC estimates.

However, as the cost of living soars globally, consumers have become more selective, challenging the sustainability of these strategies. Chanel’s price adjustments, notably doubling the cost of its classic flap bag to over 10,000 euros ($10,800), have not gone without criticism, even among the brand’s most loyal followers.

The industry’s aggressive pricing tactics have led to concerns among investors and analysts alike, who fear that continued hikes could alienate consumers and stifle growth. Some brands, recognizing the potential backlash, have begun to adjust their strategies. For instance, Saint Laurent recently reduced the prices of certain items, a move that Barclays analysts suggest acknowledges previous increases may have been overly ambitious.

As the luxury sector grapples with these challenges, the departure of a key figure like Viard from Chanel underscores the broader uncertainties facing these iconic brands. With the industry at a pivotal moment, the decisions made now could shape the future of luxury fashion for years to come.