What happens to Chanels if the economy improves?

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  1. Hey ladies,

    This crossed my mind today because a lovely PF'er mentioned she was told the new price of the classic quilted WoC's are now $1500. Being a recent buyer of a WoC for $1575 in the United States, this does raise some questions.

    Many of us know that the price of Chanel handbags dependent on the value of the dollar to the Euro. This explains the steady increase in the price of Chanels here in the US since 2001 - as the dollar has decreased in value against the euro.

    At the beginning of this year though, the economy has started to improve here in the US (only slightly) and maybe that is why the Chanel WoC is no cheaper? This raises two questions.

    1. Would you still buy a Chanel, being seen as an investment, if the economy is the improve steadily by next summer? (meaning, the prices of chanels could possible be lower next summer).

    2. Wouldn't you agree this makes sense by Americans buy so much when our economy is strong? It's not only because we have more money to spend, it's because everything else we import is much more affordable?

    Please let me know what you ladies think! Being a business major and a fashion designer (to be), I'm very curious about the habits of shoppers in regards to the economy. =)
     
  2. My personal take:

    1) Pound was at its historical low in Dec 08 and luxury shoppers were literally flocking to London to snap up LVs and Chanels (me included :biggrin:). Realising the trends, both brands (other luxury brands soon follow suit) went through a series of price adjustments between Jan and May 09 to correct the situation - more specifically LV had 3 price increases and Chanel had 2, if I remembered correctly. Now that Pound has appreciated by 20% since May, these brands have not adjusted their prices downward as the act would seem to cheapen their brand.

    2) The US economy may recover but it does not mean the currency will strengthen. In fact, there have been talks that the Euros may takover the USD to be the world's dominant currency. Should that happen, European imports will be more expensive and not cheaper for the US market, improving economy or otherwise.

    In fact, if we saw the prices of European goods before and after the emergence of Euros, there was a consistent upward trend as the Euros has been gaining strength against other currencies since its introduction. Even when there were times the Euros have temporarily weakened, the regular price increases for the brandnames were there to absorb the impact, hence we see a continuous upward movement.

    So, I think Chanel will continue to be more and more expensive and not the other way around even when the US economy improves, simply because USD may not hit the high note that it did some 8 years ago (that was when the Euros was the weakest against the USD).
     
  3. Just to add... what happened to Pound also happened to the Aussie Dollar, which plunged to it's lowest in Jan 09, and both LV and Chanel acted swiftly (in less than 2 weeks) to jack up their prices. Now that Aussie Dollar had climbed up to its usual levels, these two houses did nothing to correct the prices. So Australia is one of the most expensive places to buy Chanel now as I know it.
     
  4. Wow, this is very interesting! I really like the idea of having people who are aware of currencies and global economics on here to talk about future trends or maybe even current trends! this could help purchasing decisions a lot! =) Thanks for your input, Haute_Brands!
     
  5. nice info
     
  6. Haute-brands.. in terms of your comment on Aussie having the most expensive chanel, you ain't wrong. the price ranged from 5 to 10% difference worldwide where aussies paid more for their handbags.
    it is upsetting to think that the houses won't adjust their prices with the financial trends. i guess it means buyers will always be looking out for price increases to determine when to buy, or travelling overseas to purchase them.
     
  7. wow, all those price increases are really upsetting. they rush to jack it up, but don't readjust it downwards.
     
  8. Talk about greedy. Trouble is, when you've got a commodity people want(eg, Chanel, LV), you're the one holding the cards.
     
  9. There are so many smart people on this forum! Great info!
     
  10. Well thought out and expressed. Having gone round the world 3 times in as many years I totally agree.

    Wow the queues for the sales in the UK last winter were something else it pout me off the summer's one:nuts:
     
  11. From what I know, beside the exchange currencies that drives Chanel increase the price tags of their items, Chanel has the idea to match up its luxury bags to Hermes bags, basically saying, they do not wish their bags easily purchase by anyone, like its become very common in the public. I thought thats just silly. So, in the future, even the economy or the currency improves, they wont be lowering their price tags.
     
  12. It will be all about the supply versus the demand..
    chanel is trying to reduce the demand by increasing the price...
    I am assuming when the economy will become richer there will be more of a demand for luxury items like chanel, so, most likely chanel bags prices will go up.

    Also, the price usually increase due the inflation on the interest rates, etc.

    Personally I think chanel is a good investment
     
  13. I can't see how luxury goods are investments. Wear and Tear take place when good are used, then, the resell value just diminish as their condition worsen. I think the so called "good investment" is an idea of which corporations implants in our mind to encourage us to spend. Simple example, if you are in need of money, and you take your Rolex to a pawn shop or sell in on Ebay, you would get less back than you paid for. Most people don't take factors such as inflantion in. Personally I buy luxury goods simply because I want them, but, not for investment reason.

    What really makes me wonder is when will all of those price increase slow down or stop?
    Will people pay for $5,000, $7,500 or even more for a classic flap? Don't be mad at me ladies for what I am about to say here, and may I add that I own several Chanel bags, shoes, watches, jelweries, clothings, I buy Chanel as all of you do. But, I really don't think they are top quality, at least, not comprable to Hermes or Louis Vuitton't top lines such as Suhali or their limited edition collections. The leather, the craftman ship and the hardware don't really measure up to the prices Chanel tag on. What I can't deny is they are beautiful and screams "I have money and some class" and I fall for it.
     
  14. Princessofdears: There is the concept that inflation is high when interest rates are low and vice versa(and it makes sense). But aren't interests considerably low right now? This should mean there should be considerable increase in prices. But I guess there isn't much of a demand right now so that's why they're not doing anymore dramatic increases.

    I honestly buy Chanel bags because I like them too but it's REALLY annoying to buy a bag and have them drop in price as with anything else. =( I'm sure many of you feel the same way~ I guess it's a cost for being impatient.

    Aside from Hermes, I think Chanel is one of the next best brands out there in terms of design and quality. Yeah, LV has some top notch quality bags out there but so does every other brand if it really comes down to it. But I think overall, the quality of the bag doesn't matter if you don't take good care of it.

    This is kind of out of topic but I've been wanting a black or beige/cream birkin or kelly for a few months now. Do you guys know how well birkins and kelly's hold up well and if it would match someone who looks really young and petite? I look like a 16 year old and i'm about 5' and 98lbs, do you think it would look weird on me? I figured I'd get into it when I'm older...maybe after I'm married or have a more stable career. I'm still in college right now.
     
  15. So much intelligence in one Forum;)

    I'm not mad with you - I agree in most cases. There are some beautifully made CHANEL bags but you have to know your stuff coz some of the recent bags might BE Chanel and cost an arm and a leg but they don't fit with my understanding of 'quality'.

    The best (unbelievable) quality Chanel bag that I have was my great aunt's and made in 1974. Nothing compares - no LV, no Hermes and certainly no recent Chanel