Chanel and the wealth trap

Susanna Nicoletti
Aug 23, 2017 · 1 min read

Chanel is a legendary luxury brand owned by the Wertheimer family with an (unofficial) turnover of around 5.6 billion euro.

A strong partnership between the Wertheimer family and Karl Lagerfeld, brand mastermind since 1983, made possible the healthy growth of the business and the strong enhancement of the Brand equity during the decades.

Apparently (source Le Monde and Bilan) Chanel in 2016 suffered of a 9% drop in revenues, — 35% in net income and — 25% in profitability. Despite that the owners got a 3.4 billion euro dividend.

Chanel prestige is still almost unrivaled.

But the Brand is stuck in a sort of a limbo where the business is shrinking and the risk to become tired and dusty is around the corner.

To grow the business Chanel should:

— abandon the wealthy brand attitude, the laid down management attitude and find the right pace fueled by hunger and grit (Steve Jobs anyone?) and sharp vision of the future

— refresh the accessories look and feel and most of all the bags and shoes (see Dior)

— deploy the concept of French grandeur abroad, especially in the Far East with key events and emotional storytelling (especially on the digital side)

A fresh vision and, most of all, execution, is what can help Chanel refuel the growth that it deserves.

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