Desperate for the ultimate status symbol of the late 1990s, Samantha Jones in Sex and the City put herself on the hermès Birkin waitlist by imitating actress Lucy Liu.
Unsurprisingly, the scam failed, and at the end of the episode, Jones lost a client — and a very expensive handbag.
For the audience, it is also an inspiration for the concept of distribution control. You might think that brands want as many customers as possible to spend four or five figures on a handbag, but in reality, it's more valuable to maintain the brand's reputation.
What is the best way to create exclusivity? Scarcity.
It's been 24 years since Sex and the City aired, and Hermès still has a platinum waiting list and limits customers to buying it twice a year. There's a reason for that. If owning a special accessory requires more than just money, it is more likely to be a status symbol for the wealthy.
Chanel followed Hermès' example
Now Chanel is following suit. Since the beginning of the coronavirus pandemic, the French brand has raised prices several times, especially leather goods, and limits the number of bags that each customer can buy per year, and only one per model can be purchased.
CHANEL said that because raw material costs require customers to pay about 15% more, while rising prices also make up for the decline in sales at the beginning of the coronavirus pandemic , revenue fell 18% in 2020. Among them, the main reason is that Chanel does not allow e-commerce, and the physical store has been closed for several months in a row.
Similarly, during the coronavirus lockdown, labour procurement in France, where most Chanel goods are produced, has become more difficult. Due to the limitations of the pandemic, chanel studios were forced to close for most of 2020.
In addition, it is a supply chain issue. As a result of the epidemic, the logistics and transportation speed of raw materials such as leather and gold is much lower than usual.
The model carries a chanel classic flap leather bag.
However, Chanel's series of price increases, especially the restrictions on the number of consumer purchases, are mainly related to its booming resale market. The last thing they want is for brands to become part of a new trend in the mass luxury market.
Instead, it needs to stand out by being more exclusive and refined than ever before. Price increases and purchase restrictions can effectively achieve this goal.
The most obvious way to limit the supply of goods is to raise prices. This not only increases brand awareness, but also leads to increased sales of cheaper, more accessible product lines, such as perfumes and cosmetics.
Products are made more popular by strictly limiting the amount of leather goods that consumers in certain markets can buy in a year.
Customers line up to enter the Hermès boutique in Shanghai, China.
Starting from the Asian market
Funny enough, Chanel was the first to implement this strategy in Asia, which has supported sales of many luxury brands over the past decade.
Chanel adopted a new policy in South Korea that each customer was allowed to buy only one leather accessory, including a wallet, per year, according to the Korea Times. This policy then spread from Southeast Asia to the rest of the world.
Chanel classic clamshells come in a variety of colors, but customers can no longer buy the same bag in different colors in the same year.
These rules mean that customers can no longer buy the same bag in different colors in the same year. When you look at the navy blue and black of the Chanel 2.55 pocket bag, even if it is difficult to choose, you must make a choice.
"Very desirable luxury brands can do a lot of what they want to do," said Anita Balchandani, head of luxury analytics at consultancy McKinsey, "and if they want to raise prices to make up for the losses caused by the pandemic, they can do it completely unlike mid-market or even mass luxury brands." ”
"In many ways, it's good for businesses because it ensures that the market is never overwhelmed by a particular product and then becomes ubiquitous and no longer exclusive."
But in the global economy, how will Chanel implement this policy?
Like Hermès, it has a relatively small number of stores – 310 worldwide, compared to 305 at Hermès. And because they are not engaged in e-commerce, brands can identify customers in any of their boutiques.
"Side by side" with daigou
However, the daigou phenomenon makes this more difficult to monitor.
The English word Daigou refers specifically to chinese professional shoppers dressed in expensive clothes. They shop for domestic customers and ship them back through the glamorous boutiques of Paris' Rue Saint Honoré and the more sophisticated floors of London's Harrods, Harvey Nichols and Selfridges. This is actually familiar to everyone.
Luxury brands once scoffed at the behavior of purchasing agents, but now they have close cooperation with professional purchasing because they can't bear to leave the Chinese market.
"The daigou market in London and across Europe has changed," explains Rocky Chi, head of strategic planning at Emerging Communications, a London-based marketing agency, "and once upon a time, luxury goods companies and retailers would keep a distance from daigou; And now, they are seen as important customers.
Chinese tourists travel and shop overseas.
The main reason is that Chinese tourists, the biggest buyer of luxury goods in Europe, have been unable to travel abroad due to the epidemic, resulting in a plummeting sales. Therefore, the sales staff had to establish a work arrangement with the purchasing agent.
Chi believes that daigou will always find a way to bypass Chanel's new rules. "Daigou has become a mature and powerful market, and even though some behind-the-scenes operations may be required, big players will find a way to circumvent these restrictions. Personal purchasing tends to quickly adapt to such brand policies," he said.
The rapid rise of chanel's resale market is equally detrimental to daigou and this established fashion house.
"At present, driven by the live broadcast of Xiaohongshu and Douyin, China's medieval luxury market is growing at a rocket-like rate," Chi said, "because of this, consumers' dependence on daigou has been greatly reduced." ”
Who would have thought? Chanel and Daigou are on the same front.
Zhao Fan/Wen
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