Chanel’s approach to marketing: Then and now
The history of Chanel marketing
“Fashion changes, but style endures.” —Coco Chanel
Whether you know her as a fashion icon or an anti-Semitic Nazi collaborator, Gabrielle Bonheur "Coco" Chanel left her mark on the world when she rejected convention and freed women from their corsets in the early twentieth century.
What began as a small hat shop in 1910 Paris is now a $10 billion company whose name is synonymous with luxury.
If you happen to find yourself in an affluent neighborhood anywhere in the world, odds are you’ll see a Chanel boutique selling any one of its elegant products: haute couture, ready-to-wear clothes, watches, handbags, skin care, jewelry, oh my!
But one does not simply become a luxury brand overnight. Luxury brands exude exclusivity, scarcity, and high standards—and tough decisions need to be made over a long period of time to manufacture this reality.
No click-to-buy for Coco—but for how long?
Now, as the pandemic accelerates ecommerce as a mainstream norm, Chanel is one of the last luxury brands refusing to sell online. During an era when you can buy a mansion on the internet, why is Chanel lagging on what seems like a no-brainer sales channel?
“Our products require more,” Bruno Pavlovsky, president of Chanel Fashion and Chanel SAS, told Vogue Business in 2020—the same year Chanel saw an 18% decline in sales. “Today, eCommerce is a few clicks and products that are flat on a screen. There’s no experience. No matter how hard we work, no matter how much we look at what we can do, the experience is not at the level of what we want to offer our clients.”
Chanel sets the standard for the luxury brand experience, and it shows. They launched a spa at the Hôtel Ritz in Paris, where Coco Chanel herself once lived. They serve champagne in their stores. Their concierge services come with personalized texts and phone calls.
Yet their website remains un-shoppable, with no click-to-buy in sight.
While Chanel’s digital marketing strategy is one of the most robust in its category—the company’s Instagram account boasts 45.8 million followers, the highest of any luxury brand—the company is holding on to its in-store boutique experience for dear life. And to understand why is to know Chanel’s rich history of rebellion, persistence, and commitment to high standards.
Keep reading to learn more about how Chanel mastered the art of scarcity marketing and aspirational advertising to become one of the world’s most recognizable luxury brands.
Coco Chanel’s lifetime
1883: Gabrielle Bonheur "Coco" Chanel is born.
1906: Chanel becomes Étienne Balsan’s mistress and enters French high society.
1908: Chanel begins an affair with Captain Arthur Edward 'Boy' Capel, who finances her first shops.
1910: Chanel becomes a licensed milliner and opens her first boutique in Paris, called Chanel Modes.
1912: Chanel’s career takes off when theatre actress Gabrielle Dorziat wears her hats in Fernand Nozière's play “Bel Ami.”
1913: Chanel begins making leisure and sport clothing for women out of her new shop in Deauville.
1916: Chanel reimburses Capel’s investment in her business.
1920: Chanel launches the first version of her famous Chanel suit made of tweed.
1921: Chanel launches her first perfume, Chanel No. 5, developed by French-Russian chemist and perfumer Ernest Beaux.
1922: Chanel meets businessman Pierre Wertheimer, who would receive 70% of the profits from Parfums Chanel—which Chanel would soon regret.
1926: Chanel popularizes the “little black dress” with a photo in American Vogue.
1929: Chanel creates the first hands-free handbag with a thin shoulder strap.
1931: Chanel begins designing clothes for Hollywood.
1933: Chanel collaborates with designer Paul Iribe to make jewelry commissioned by the International Guild of Diamond Merchants.
1935: Chanel couture employs 4,000 people.
1939: Chanel closes her shops due to World War II, and 4,000 people lose their jobs.
1947: Chanel and the Wertheimers reach a settlement for Chanel No. 5: Chanel receives wartime profits and 2% of all future worldwide sales.
1954: Chanel reopens her couture house and launches her comeback collection.
1965: Wertheimer’s son, Jacques, takes over the management of Chanel’s perfume business. He mostly neglects the business, and it loses relevance.
1971: Chanel dies at age 87.
Post-Coco Chanel years
1974: Alain Wertheimer takes control of Chanel’s perfume line and revives Chanel No. 5 with scarcity marketing and million-dollar campaigns.
1978: Chanel launches their first prêt-à-porter (ready-to-wear) line and worldwide distribution of accessories.
1983: Karl Lagerfeld takes over as chief designer.
1987: Chanel launches their first watch.
1990s: Chanel begins to number all of their bags to fight counterfeits.
1994: Chanel is the most profitable French fashion house, with €570 million in revenue on ready-to-wear clothes alone.
1999: Chanel launches their first skin care line.
2002: Chanel operates 25 boutiques in the United States.
2003: Chanel launches Coco Mademoiselle to target younger consumers.
2019: Karl Lagerfeld dies at age 85, and Virginie Viard takes over as creative director.
Less is more: How Chanel stripped down fashion to break convention
Every brand success story has one thing in common: differentiation.
Sara Blakely reinvented pantyhose with SPANX. Nintendo merged the toy category with video games in the 1980s. Dollar Shave Club said razors don’t have to cost an arm and a leg, and kicked off the direct-to-consumer subscription model trend.
Decades earlier, Coco Chanel was reimagining the way women could dress.
TL;DR: It didn’t include a corset.
Coco Chanel’s vision for women’s apparel was equal parts creativity and necessity. World War I forced women en masse into factory work, where corsets were a serious impediment to hard labor. France was also facing a fabrics shortage, and Chanel was always on the hunt for cheap material that wouldn’t bankrupt her burgeoning business.
As soon as Chanel got her hands on some jersey fabric, she was able to design the clothes she wanted to wear, including “masculine” colors such as navy and grey, and trousers, of all things—a bold move for women’s apparel at the time.
Jersey—primarily used to make men’s underwear at the time—was integral to Chanel’s early growth. The cheap material allowed Chanel to experiment to her heart’s content, which eventually led to the creation of free-flowing, all-purpose garments for women.
For the first time, women could move in their clothing. They could be fashionable while active, without the restriction of rigid material and corsetry.
“Be the antithesis” was Chanel’s motto at the time, and it paid off. When she designed the bottle for her first and most popular perfume, Chanel No. 5, she created a transparent container that was almost invisible to the naked eye—all because other perfume bottles at the time were ornate. You couldn’t pick them out of a lineup on a vanity, whereas Chanel’s perfume was undeniably different.
“In order to be irreplaceable, one must always be different.”—Coco Chanel
Every early decision at Chanel was made in the spirit of rebellion—and that led to product differentiation.
Masters of scarcity marketing: Luxury as synonymous with exclusivity
It’s one thing to differentiate your product, but how do you make the leap from differentiation to luxury brand?
The answer lies in tough decisions about product, price, and placement.
Fewer products, more mastery
“We introduce a new fragrance every 10 years, not every three minutes like many competitors. We don’t confuse the consumer. With Chanel, people know what to expect. And they keep coming back to us, at all ages, as they enter and leave the market.”—Jean Hoehn, Chanel Marketer, 1980s
Chanel isn’t pumping out new products at breakneck speed. The company instead focuses on high-quality craftsmanship by world-famous designers.
For example, it takes 130 hours of craftsmanship, 30 client measurements, and 18 pieces hand-sewn together to create this haute couture jacket:
Quality is of utmost importance to Chanel, and the company does not cut corners. You could say the brand gives no f&%!s about keeping up with the pace of demand in a world bombarded by fast fashion—an attitude that was born and bred by Coco Chanel herself.
Chanel’s premium pricing relies on global consistency
That jacket that takes 130 hours to make? If it’s anything like Chanel’s latest collection of ready-to-wear jackets, it ranges between $10,000–$20,000.
If that wasn’t enough, Chanel announced a 4.7% price hike for 2021—the year after an 18% decline in sales during the pandemic. The increase may not seem like much, but considering how much some products cost, consumers could be looking at paying $300–$400 more than the previous year.
The psychology behind premium pricing isn’t rocket science: When your products cost more, you create more perceived value. If the price is higher than your competitors’, that must mean your product is better, right?
Premium pricing works when your product over-delivers. Chanel’s commitment to craftsmanship and personalized customer service does exactly that, which has ultimately led to brand loyalty—but there have been some hiccups.
When the Euro depreciated in 2015, Chanel products in Europe became more affordable for Chinese consumers. To course correct, Chanel raised its European prices because they were afraid people would travel to Europe to buy “cheap” Chanel.
Meanwhile, in mainland China, people realized that it would be cheaper to fly to Hong Kong to buy Chanel than to buy it from their local boutiques.
Inconsistent pricing across regions created a distortion of perceived value, and people began to question the products’ true value and Chanel’s brand integrity.
Years later, Chanel has managed to smooth out their pricing consistency all over the world, and brand value has been restored.
Chanel plays hard to get—and their brand wins the game
When Chanel No. 5 fell out of favor with consumers in the 1960s, the company embarked on a mission to revive product sales with aspirational advertising (see below) and scarcity marketing.
When CEO Alain Wertheimer was tasked with rebranding the iconic perfume—the one Marilyn Monroe said she wore to bed—he actually removed the product from 6,000 outlets.
Bold move. Why would he do it?
To create scarcity. In the 1960s, Chanel No. 5 was available in 18,000 outlets, including drug stores. The product was sometimes sitting alongside stationery, cheap makeup, and other regular household items. The context of the product, or placement, didn’t reflect the brand.
Wertheimer’s decision is a great example of the tough choices that need to be made to become a luxury brand. How difficult must it have been for Chanel to remove their flagship product from stores when sales were down? The decision required long-term vision and an unwavering confidence that restricting availability would create more demand.
Now, after a tough year in 2020, Chanel is betting on exclusivity again as they refuse to offer online ordering to consumers. Time will tell if the decision is a good one, but history would suggest they won’t relent anytime soon.
- Focus on product quality over quantity to create brand loyalty.
- A premium pricing strategy is what makes a luxury brand—but only if the product over-delivers and pricing remains consistent across regions.
- Luxury brands limit their availability to create scarcity and exclusivity. If everyone can get their hands on it, it’s not a luxury product.
How aspirational marketing revived brand relevance: Chanel’s 1970s rescue
Chanel No. 5’s early marketing strategy in the 1920s was simple: Coco Chanel would invite rich people over for dinner and give away free bottles of the perfume. She would also spray the perfume around all of her boutiques, so that shoppers began to associate her brand with the signature scent.
In 1934, Chanel launched their first official ad campaign for Chanel No. 5 in the New York Times. But what probably seemed like a great idea at the time would later cost them in the 1960s: the ads were everywhere, as was Chanel No. 5, and the perfume became … common.
When Alain Wertheimer assumed the role of CEO in 1974, he set in motion a rescue plan that would include removing Chanel No. 5 from 6,000 outlets to create scarcity. He also empowered in-house artistic director Jacques Helleu to create a new marketing campaign that would revive the allure of the perfume.
In true Chanel spirit, Helleu rebelled against advertising convention and removed all copy, including headlines and slogans. He also used the transparency of the bottle itself as a focal point to create a sense of luxury through minimalism.
Elegant women such as Catherine Deneuve highlighted the bottle’s transparency by holding it against their own body, insinuating that Chanel No. 5 was a seamless part of their own corporeal being. The images are almost a callback to what Marilyn Monroe said when she was asked what she wore to bed: “I only wear Chanel No. 5.”
The campaign was such a success that it was extended indefinitely. Well into the 1990s and 2000s, you were able to catch such women as Nicole Kidman and Lily Rose Depp behind a bottle of transparent, elegant Chanel No. 5.
- Conventional marketing advice—be everywhere—doesn’t work for luxury brands. When luxury brands are mass marketed, they risk losing their allure.
- Product and packaging design are everything—so much so that they may be featured and highlighted in advertising to pique consumer interest.
The Chanel of now: Engaging with gen Z as a luxury brand
You may not be able to buy Chanel from Chanel’s website, but that doesn’t mean the brand is sleeping on digital.
Chanel’s Instagram account boasts 45.7M followers, the most of any luxury brand in the world. Meanwhile their YouTube channel has 1.86M subscribers, and their video content has everything from mini-documentaries to beauty tutorials.
It’s also not entirely true that you can’t buy Chanel online; they’ve made an exception for some cosmetics. Chanel’s free virtual lipscanner app allows anyone to scan their surroundings for a color they like, then matches that color to a shade of Chanel lipstick, which can be tried on and purchased through the app.
The app experiment is a significant one. Fragrance and beauty make up 36% of Chanel’s product line, and by the end of 2021, the app will feature about 400 products. “The main innovation is the ability to bridge inspiration and product discovery,” said Cédric Begon, director of Chanel fragrances and beauty’s Connected Experience Lab.
It makes sense that Chanel would use its cosmetics line to experiment with ecommerce. Buying a lipstick for $50, while still expensive for lipstick, isn’t the same as buying a suit for $10,000. Chanel’s brand integrity for cosmetics doesn’t face the same threat level as perhaps their jewelry or apparel lines, which sell at a much higher price point and therefore carry higher expectations for customer service.
Chanel’s future in ecommerce: When will they relent?
Chanel’s current stance on ecommerce may chip away over time. Most public statements from the company emphasize the need to prioritize an experience synonymous with luxury, high standards, and personalization, which they’ve begun to achieve with their concierge service.
Chanel’s beef with ecommerce seems to be more about the barriers to replicating their in-store experience online. And they’re not alone: Dior also requires a boutique visit to buy women’s apparel.
After a bad pandemic year that forced Chanel to close the majority of its stores, the brand is likely reconsidering its stance on ecommerce. Its investment in social content and apps suggest a larger strategy to capture younger earners, which will eventually lead to more ecomm stepping stones.
No one is immune to the ecomm tidal wave. Not even Chanel.