Chanel's luxury dream is turning to dust

The world of luxury branding is one of great paradox. It is a place where tradition and creativity collide. Where ancient founders and youthful models meet and make magic together. Where impoverished artisans rise to become emperors of incredible fortunes.

For marketers, the world of luxury holds a special place because it represents the origin of brand management. The modern discipline of brand management is officially accredited to Procter&Gamble and a memo written in 1931 by Neil McElroy. But long before McElroy was born, and even before P&G was founded, the business of brand management was being practiced and perfected by the founders of the great luxury brands.

Among those great names, few shine brighter than Gabrielle “Coco” Chanel. Chanel did more than create products, she redefined the whole nature of the categories she worked in. The little black dress, No 5 perfume, the tweed suit, the total look, costume jewellery, the cashmere cardigan. All Chanel’s inventions, and all now part of fashion legend.

As a lover of brands and someone who has worked for a decade for some of the biggest luxury houses as a consultant, I always gain inspiration from a local Church of Chanel. But in recent months, I must confess a growing sense of disappointment at the state of the brand.

Its shop windows lack inspiration, the new collections are a little too derivative and the clientele looks older to me on each visit. Whisper very softly, but I think Chanel is getting dusty.

Of all the criticisms you can level at a luxury brand, dusty is perhaps the most devilish. The great luxury brands are unusual in that they are much older than the clients they currently target. For each to survive must practice the art of constant brand revitalisation - a delicate process in which centuries of heritage is carefully balanced with contemporary rule breaking. Should a luxury brand ever slow down in the latter category, it rapidly becomes dusty.

And to accuse Chanel, of all the luxury brands, of being dusty is tantamount to betrayal. Even the most fierce fashion critic or the biggest competitor of Chanel would instantly tell me I am a fool to even counter such an accusation. Of all the great houses, luxury purists believe Chanel is the one that never puts its immaculately presented foot in the wrong direction. And yet my branding bones rarely let me down. I think I am right on this one.

Of all the criticisms you can level at a luxury brand, dusty is perhaps the most devilish

The film industry has certainly not helped. First Audrey Tautou was “Coco before Chanel”. Then Anna Mouglalis and Mads Mikkelsen were “Coco Chanel and Igor Stravinsky”. Neither film was the kind of publicity that the house of Chanel would have asked for because both only focused on the past and thus increased the gathering dust descending on the brand.

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If my subjective impressions of a few windows and a couple of recent movies aren’t evidence enough of Chanel’s plight there is also the recent data from Millward Brown’s empirically based Brandz valuation. According to the company’s 2010 estimates the top three luxury brands - Louis Vuitton, Hermes and Gucci - all enjoyed significant increases in brand equity. But Chanel, at number four, lost 11% of its brand value over the past 12 months. It’s a rare glimpse into the actual state of Chanel’s brand health, which is usually preciously guarded and almost never discussed with outsiders.

Much of Chanel’s lost brand value can perhaps be explained by the company’s reluctance to enter China. While brands like Omega and Armani focused heavily and early on the new empire rising in the east, Chanel held back. As global chief executive Maureen Chiquet admitted five years ago when the topic of China first emerged: “We’re going to let our competitors make the first mistakes in China before we move in.”

That’s looking increasingly like a mistake as China’s love of luxury and economic growth continues to surprise even the most ardent admirer of the east.

Questions of Chanel’s predominance have also emerged closer to home. Two weeks ago, the brand paid a record cash fee to secure a flagship store on Bond Street in London. The business press took this as evidence of London’s continued success in spite of the current recession.

What they did not mention is that the store is directly opposite the amazing new Louis Vuitton flagship store that recently opened to much fanfare.

In an earlier era Chanel would have been pioneering the retail landscape of London. Now it seems Chanel is playing catch up. And that’s a game that ill befits a luxury brand.

Almost a century ago Coco declared: “Fashion passes, style remains.” She will be hoping from her perch up above that the same sentiment now applies to the wonderful house she built all those years ago.

Mark Ritson is an associate professor of marketing, an award-winning columnist and a consultant to some of the world’s biggest brands

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Readers' comments (26)

  • Half right I think.

    Chanel has always had a much stronger sense of its history than many of the other luxury brands which tend to follow the fashion trends much more. Chanel is literally classic in everything it does.

    But I agree that in maybe the past 2 or 3 collections the classic has dominated the trend completely. In Karl, Chanel have the greatest creative director of his generation (and perhaps any other). But he is in his mid 70's. Perhaps its, gasp, time for a change?

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  • I just don't agree with this article. I think Chanel has always - and has continued to - maintain a fine line between being a classic brand and one that has two superb shows a year that define couture. Ask anyone and they will tell you that Chanel still leads and all else follow - literally.

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  • While fashion gets paired down, refined, and reduced, Chanel (and mostly Karl Lagerfeld's direction) comes off as tacky and irreverent. That a house built on the codes of feminism and sleek modernism should be the purveyor of exuberance and dated ostentation (that gold lion during at the couture!) at this time is baffling. That Celine, a brand that has always crept in the shadows behind Chanel, is the chicest thing in Paris and is winning over the hearts/minds/wallets of fashionistas all over shows just how behind the times Chanel actually is. They NEED a new direction, everyone in this industry does right now.

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  • I have felt this way for several seasons and I'm glad others are waking up to it as well. The creative direction is stale, the designer seems to be stuck in the 80s. Chanel seems vaguely campy, a caricature of its former self and only for older women. Repetitive runway shows, etc. I'm sure you see it too.

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  • I agree. You can smell these brands to an extent. Armani? Seems to have lost its lustre and their numbers recently verified that. How about YSL? Go into a shop and see for yourself. Great designers but there's a brand that is losing its shine in London at least. There are no clothes on show in the Mayfair store hardly - just high-margin accessories and couldn't-care-less assistants. American Apparel - did the same thing happen here but with kids. Why did like-for-like sales plummet? Did it suddenly become uncool with kids? CK? Hugo Boss? How long will people pay a surplus to identify with brands that offer little?

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  • Wow, someone is not getting a 2.55 for Christmas.

    Every brand goes through peaks and troughs and I agree that Chanel is not at the height it has been or once was. What is still amazing is that Chanel at it lowest is still higher than most other brands at their high.

    But alas, maybe it is time for the old Kaiser to move on. My money is on Marc Jacobs to take over.

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  • Great + timely insight into current state of Chanel. Can't help but read between the lines and see the subtle digs at The Kaiser - he is getting on isn't he.
    Completely agree with Anonymous - that gaudy and archaic Gold Lion was like lonely totem to an irrelevant era of 'luxury'.
    Would love to see what someone like Hedi Slimane could do at the helm...

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  • Not only is Chanel dusty, but dowdy as well. Walking into the shops, it's always a sea of the same boring palette (some may call it "classic/timeless", but I say it's old-fashioned).
    And in addition, just touching the bags, one can tell the quality is lacking these days, which given the recent 20% price hike, is ridiculous. Chanel is a big conglomerate and it is only focused on using its name and heritage to market sub-par products in order to fulfill its bottom line: making a hefty profit. A good name can only take you so far...
    Highly agreed Mr. Ritson; at least someone in the fashion business has common sense and isn't afraid to call out the truth.

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  • Your comments about China are unsubstantiated - Chanel has a strong presence on the Mainland and is growing even more. In a recent survey by Ruder Finn Chanel was one of the top 3 brands coveted and bought by the mainland Chinese. In December 2009 they held one of their biggest events in Shanghai, where they simultaneously opened one of their largest boutiques and launched the Paris-Shanghai collection.
    It's not so much dusty as it is over marketed. The problem with Chanel is that its no longer as exclusive as it is used to be. They are aware of this hence the recent price increase on their classic bags (the item the layman "aspire" to own).

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  • If you look at Chanel's ads in the last couple of seasons, they are way off the mark. They look indeed "dusty", like they were made in the 80s and more importantly, I wonder every time I see them "what are you trying to say? and to whom are you trying to say it???".
    I think they have lost their way. The campaign in magazines now is the first one in a long time that feels contemporary and yet, it is not very good.
    The shows are fabulous in terms of set, but the clothes are NOT directional and I do not agree, Diana Fletcher, that anyone is following in terms of design either.
    Celine, Chloe, Prada, Vuitton, Van Noten they are being followed. Not Chanel.
    Chanel recently appointed several young "it-girls" as brand ambassadors.
    Those girls are followed by legions of young women around the world - their outfits and lifestyles discussed and envied in blogs and forums (fora?) around the world.
    Though it is a modern thing to do - celebrate that type of girl - I don't know whether it has really added value to their brand as it seems so clearly that Chanel is doing them a favour and their "lights" don't shine brightly enough to reflect any real glory back on Chanel.
    I agree, Chanel is dusty!

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