Rumors of Department Store Chanel shakedown
- Thread starter Mimolette
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I’ve heard the same that chanel has cut commission for Saks sas at leased stores and the move will eventually affect the hybrids too. This is for Saks and neimans. Sa commissions will only be for shoes, Rtw and fine jewelry going forward. Going from 7 to 0 percent is a huge pay cut for some sas because handbags and fashion jewelry sales are their primary sales - their bread and butter. I’m guessing the move has to do with eventually moving out of department stores and going to stand alone only. Chanel is naive in my opinion thinking it can do well on its own. This is also incredibly greedy imo shafting sas like this and I heard it was also with almost no notice. The economy is slowing and these price increases and other sales tactics are going to backfire.
Doesn’t believe Chanel is moving out of department store anytime soon. They just opened a boutique in a department store recently. Plan is to take over the rest of the Chanel in department stores that aren’t leased yet. And each mall is to only have one location that has Chanel. Topanga Neiman Marcus and Nordstrom used to both have a Chanel Boutique, when the Chanel took over Nordstrom, the Neimans there no longer carried Chanel. Chanel also closed Robertson Blvd boutique. Though Chanel is doing the complete opposite of what other brands are doing is opening free standing beauty stores.
My neimans associate told me their commissions will get cut in July. There is soooo much inventory in store and she said sales are very slow
I just clarified this, Chanel didn't stop paying its own SAs commission for bags, they stopped paying department store SAs commission for coming into the leased store and selling items.
My home boutique is a store inside of Saks (situated in its own alcove, separated from general Saks sales floor), and carries bags, SLGs, scarfs, sunglasses, fashion jewelry, and RTW (no watches/fine jewelry/shoes), and out on the general Saks floor, there are Chanel tables/cabinets for shoes and watches within their perspective sections. There are 2 populations of SAs that can service clients, Chanel SAs (employed by Chanel), who can only sell what's inside the store (so no watches/fine jewelry/shoes), and Saks SAs (employed by Saks), who can sell everything inside the store and out on the general Saks floor. Now Chanel has stopped paying commission to Saks SAs for selling anything inside the store except for RTW, but obviously the Saks SAs can still sell bags from other brands that exist within Saks.
My SA, who is employed by Chanel, is actually quite happy about this change, because she no longer has to compete with Saks SAs for sought after bags, and now has more stock to offer her actual Chanel clients. She used to get quite irritated with Saks SAs when they come into the store and selling everything remotely, and this move to cut commission from Saks SAs levels the playing field for SAs like her who can't dip in both pools.
So in short, Chanel SAs are still being paid commission for selling bags.
My home boutique is a store inside of Saks (situated in its own alcove, separated from general Saks sales floor), and carries bags, SLGs, scarfs, sunglasses, fashion jewelry, and RTW (no watches/fine jewelry/shoes), and out on the general Saks floor, there are Chanel tables/cabinets for shoes and watches within their perspective sections. There are 2 populations of SAs that can service clients, Chanel SAs (employed by Chanel), who can only sell what's inside the store (so no watches/fine jewelry/shoes), and Saks SAs (employed by Saks), who can sell everything inside the store and out on the general Saks floor. Now Chanel has stopped paying commission to Saks SAs for selling anything inside the store except for RTW, but obviously the Saks SAs can still sell bags from other brands that exist within Saks.
My SA, who is employed by Chanel, is actually quite happy about this change, because she no longer has to compete with Saks SAs for sought after bags, and now has more stock to offer her actual Chanel clients. She used to get quite irritated with Saks SAs when they come into the store and selling everything remotely, and this move to cut commission from Saks SAs levels the playing field for SAs like her who can't dip in both pools.
So in short, Chanel SAs are still being paid commission for selling bags.
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I agree with your assessment. My home boutique is a store inside of NM that carries the same merchandise as you outlined above. There has been friction between Chanel SAs and NM SAs over remote handbag sales or clients coming into the boutique, looking at/trying on bags (which requires an SA’s assistance) and leaving without buying anything. Shortly after that a NM SA will come into the store to buy the same bag for their customer. It got to a point where the boutique had to review the surveillance camera footage and, if necessary, split the commission. It makes me wonder what kind of commission structure the department stores are using. I feel bad for anyone in retail these days.
I know a few Saks Chanel sas and they’re quite upset over this change in commission. Handbag sales and accessories like slg were a significant part of their commission ie their bread and butter and Chanel ripped that from them. While they can sell anything else in boutiques ie lv, celine, Dior etc these days that’s been a harder sell with the economy. Sales as noted by lvmh’s recent Q1 report showed slowing sales in the US. I feel for these department store sas.
At the same time as chanel is making these changes in department stores, it’s greatly expanding its boutique presence in major hubs like BH. I thought I read that revenues were 17.2 billion in 2022, and though it’s slowed to single digit growth this year in the US, other markets like Asia are still going strong. There is certainly a shift, but it seems intentionally away from department stores; bag and accessory customers; and occasi9nal shoppers and more towards the boutique client who buys across the board.
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I was recently told by my SA that Chanel corporate is trying to pull out of department stores for both fashion and beauty. My home store is moving out of Saks (but staying in the same mall) in 2024.
Haven’t noticed the shift away from bags and accessories clients, though that may be because my store is sitting on a lot of inventory that they can’t move.
Hmmm...If we start to see more bags and accessories inventory at Chanel boutiques, I hope it would become a wakeup call to Chanel that these categories could become close-to saturation in the market. (?)
Meanwhile, I really hope Chanel can increase their production on RTWs, so that their RTW clients have better access to the pieces they want and the SAs can get decent commissions for selling the RTWs. it seems it is always quite difficult to source or reserve certain popular RTW styles every season..
Meanwhile, I really hope Chanel can increase their production on RTWs, so that their RTW clients have better access to the pieces they want and the SAs can get decent commissions for selling the RTWs. it seems it is always quite difficult to source or reserve certain popular RTW styles every season..
This doesn’t bother me, so many premium brands have pulled away from department stores. Lots of designers won’t sell through dept stores.
It must be easer to manage the brand alone, instead of through a middle man.
hello! This thread has been such a fascinating read - so many changes!
A few (unpopular) thoughts:
I think it's great that we have this forum where we can vent out our frustrations and even our emotional responses to what we see happening. I know this thread is a bit dated....but I would love to know how those department SAs are feeling now that its been months since commissions were removed?
A few (unpopular) thoughts:
- Personally, I think the commission structure in department stores may have contributed to SAs selling to resellers - because they are motivated to sell items as quick as they can to anyone. If you can make 7% commission by selling a 9K bag, would you care who you sell it to as long as it's sold? Would you be more inclined to help out another SA or would you be more likely to try to hide the bag from your colleagues and sell the item on your own? So less teamwork, and more individual hustle. I think one of the posters above mentioned the competition between boutique and department store SAs within the same mall. It clearly created strife on the sales floor but also indicated that Chanel didn't have full control over how sales were being managed outside of their own boutiques.
- Luxury is not meant to be accessible for all. So if the brand needs to take measures to better manage how their items are sold...then so be it. For what its worth, a few of the boutique SAs I know have mentioned they are overall happier with the Chanel compensation structure compared to the older commission model. My boutique SA is compensated very well - she basically alluded to that they make over $100K a year and they get great benefits. Also - I shop at a boutique and on the rare times where i drop in and my SA isn't around, she's okay with me making one off purchases because there's a team goal. I would hope that if Chanel is taking over the department store leased locations, those SAs would be moved into the same compensation plan? And if they aren't employed by Chanel (still employed by Saks/NM), I would hope they are building out their client portfolio to cross sell other brands as sales professionals should be doing? I don't see how its Chanel's fault/responsibility for those SAs to make their sales target when they aren't Chanel employees? Their bags sell themselves (at least they used to), so why should they incentivize non-Chanel employees to sell them? Especially if their own SAs aren't on that same plan
- Last year, I was reading threads about how people believed Neiman Marcus Chanel stores were deliberately selling straight to Fashionphile because of their 'partnership' (which i DO NOT believe). If I were Chanel corporate reading this, I'd want to make changes to make sure they eliminate any existing incentives for the 0.0001% of SAs that may contemplate doing that. It's probably what I would advise them myself. While the after-effects may seem personal and awful for the SA you have a relationship with....it really isn't personal and it happens in a lot of other types of companies. Commission plans can change as the nature of the market/business strategy changes.
- On that note....I don't think Chanel cares that they will lose a customer segment due to any of their recently enacted policy changes. It's not naivety on their part. They already analyzed the impact to customers/sales when they made these decisions and decided the tradeoffs were worth it. It's pure calculated strategy. Luxury is supposed to be exclusive and if they need to repulse a segment of their current customers away from buying their goods in the future to secure that....i think they are fine with it. That "exclusivity" is more important to them.
I think it's great that we have this forum where we can vent out our frustrations and even our emotional responses to what we see happening. I know this thread is a bit dated....but I would love to know how those department SAs are feeling now that its been months since commissions were removed?
I would imagine no commission on bags will turn things more into Hermes style shopping. If you want the bags you want, you will have to pay for other things that earn your SA a commission before you get access to any non commission items of great popularity….
Should we be getting ready to have a pre-spend at Chanel now?
Should we be getting ready to have a pre-spend at Chanel now?
This sounds more plausible than some of the rumors that were posted.
Although, my NM SA is still sending me photos of bags, jewelry, shoes, etc... so she's obviously still being paid to sell despite being in a dept store.
Well....the boutique SAs haven't been working off individual commission plans for years now. They have team targets and are compensated when those targets are hit. My SA constantly reminds me that she isn't on commission when I come in. As far as I am aware......customers can still buy classic flaps and other bags as long as they are in stock in store. I don't know why a department store Chanel would be any different. Unless you have a bad apple SA who is trying to earn commission on categories Chanel still applies commission rewards to for non-Chanel managed locations (e.g. RTW, shoes) and using this "carrot" as a way to get that? In which case, switch SAs haha. At Hermes, a client's profile is reviewed by the store manager and they are individually approved for a quota bag twice a year. As of now, Chanel is not doing that and you can buy one classic flap a month. I think it's too early to assume Chanel will go in that direction. The classic bags are so expensive now, that personally, I feel the SAs are eagerly showing off their inventory when I come in.
Edit: A couple of posts above mentioned that the boutiques are still paying their SAs commission. Not sure what's real anymore.
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