Does Chanel Need Innovation To Save Itself?

Without innovation, we must lag behind.

brand

Performance in 2016 continued to decline, its sales revenue and profits recorded a sharp decline for 2 consecutive years, compared with other luxury brands, has been seriously lost.

According to the world clothing shoes and hats net, Chanel has submitted its financial report to Holland Amsterdam industry and Commerce Department last year.

Data show that Chanel sales fell by 9% to 5 billion 670 million dollars over the previous fiscal year, operating profit fell 20% to 1 billion 280 million US dollars, net profit fell 35% to 874 million US dollars, and the profit margin was 15.4%, a sharp decline compared with 21.5% in 2015.

As for the decline in performance, Chanel explained in the report that it was mainly caused by frequent terrorist attacks in Europe last year, especially in France, resulting in Weak Tourism and low consumer desire for shopping.

In addition, Chanel sold its British subsidiary Chanel Limited UK last year to another entity controlled by Chanel group, which also damaged its performance to a certain extent. Chanel Limited UK contributed about 11% of its total sales.

At present, Chanel group is mainly owned by Alain Wertheimer and Gerard Wertheimer, and is not yet listed.

According to Bloomberg estimates, the Wertheimer brothers two paid dividends up to $3 billion 400 million last year, and their total wealth totaled about $22 billion 400 million.

Since 2015, Chanel has faced the challenge of performance.

In the fiscal year ending December 31, 2015, Chanel's operating profit fell 23% to $1 billion 600 million, while total sales fell 17% to $6 billion 240 million.

Cosmetics and perfume business, which accounts for a large portion of Chanel's profits, was $2 billion 910 million in 2015, down 21% from the same period last year.

In 2015, European terrorist attacks and other security issues really put a shadow on the European luxury industry.

But some analysts think the comparison

The performance of Hermes, Kai Yun and other groups is likely to overestimate the impact of this factor on Chanel performance, especially the group's "profit cow" cosmetics and perfume business began to drop in 2015, which is enough to arouse the group's vigilance.

For the current Chanel, it is more important to look for reasons from within.

Although DDT said in its earnings report for Chanel, sales in 2016 were basically stable compared with 2015.

But compared with the 3 years ago, the brand performance has soared, and nearly two years of Chanel are in the predicament of performance.

Chanel is a truly capable rocket launcher for the 2017 autumn and winter series.

An earlier analysis pointed out that the current strategic direction of Chanel has become a problem.

First of all, regardless of cost, heavy money to run show.

After the last time in the showroom to build a simulation rocket, Chanel has built second Eiffel Tower in this year's showcase.

The commentator, Ana Andjelic, criticized the publication of the 2017 autumn and winter space series, and emphasized that the Chanel of the show was misleading the future direction of luxury brands, making fashion more and more superficial and unable to deliberate.

What is more alarming is that few people in the industry dare to criticize the luxury goods giant Chanel.

Because Chanel is spending money on advertising and marketing, it is an important customer of many fashion media. Therefore, most media commentaries after the fashion show focus on the theme show device, and this is precisely because there is not much room for discussion about the lack of changing products.

The biggest problem is the product.

Some industry points of view that Chanel's clothing products have not been innovated for many years, almost every season is based on the classic tweed suit, and the deformation of each season is almost "changing the soup without changing the medicine", lacking the innovation of design.

Chanel also seems to be concerned about social issues, such as the computer room of the 2017 spring summer series.

But apart from putting the show into a data center and putting fiber into fancy fabrics, the show does not reflect the characteristics of the digital age. The theme of the series remains as "landscape" rather than "content".

In the huge computer room, the floating data in the invisible end is still manifested through visible colored fibers, more or less disappointing.

After the launch of new products, some analysts believe that the new products that are placed in the window with the server can hardly see what the brand wants to express.

On the surface is embracing new technology, but in fact it still follows the old thinking. Some people think it is hypocritical futurism.

While consumers are increasingly reluctant to buy such grand scenes and topic marketing, although they have stimulated the topic of social media for a while, they have not brought more consumers into Chanel shops, and young people want some more fresh design.

Of course, "no money" is a common sense of the luxury goods industry.

In terms of accessories, the brand has also lacked innovation and labeling in recent years.

In addition to Chanel 2.55 and other classic items, the handbag product has not highlighted the new model. This year, the new Gabrielle handbag has been vigorously promoted, and the sales condition remains to be tested.

In contrast, the Vintage Chanel in the secondary market is more popular.

In addition to the popular classic pair of shoes, only straw woven canvas shoes have received a good response, and this style has been launched for some time.

As for core business cosmetics and perfume, although the Department's performance data have not yet been disclosed by the media, the 2015 performance has already turned on a red light.

At the end of the year, Chanel and Coty group reached an agreement with 15 million shares of A-share, which accounted for about the non cash form of its 4.2% group shares, to sell its popular color makeup brand Bourjois to Coty group, which affected the performance of 2016 to a certain extent.

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In addition, in order to boost the perfume business, Chanel launched a new version of No.5 L 'Eau perfume last year and will continue to launch Gabrielle perfume this year.

However, some analysts pointed out that Chanel will face more and more pressure in this field.

Chanel's strong rival and LVMH group's Louis Vuitton also pushed back the perfume business 70 years ago last year. It was in July this year that the Louis Vuitton perfume series officially entered China in an all-round way, competing with the Gabrielle launched by Chanel7.

Data map: now, Chanel has increased its marketing efforts in the name of "Gabrielle year".

Take China as an example, in April of this year, Chanel opened a CocoCaf e cafe in Shanghai, mainly to stimulate sales of cosmetics products.

In terms of digitalization, the market situation of Chanel is not easy. Some analysts believe that the brand is in a state of uncertainty, especially in the key strategic issues such as the electricity supplier and the millennial generation.

For example, Chanel and LVMH have different attitudes towards the electricity supplier.

Bruno Pavlovsky, President of Chanel fashion department, said in an interview this May that it is still cautious about the electricity supplier. Contrary to the fact that other luxury brands have slowed down or stopped increasing physical store practices, Chanel has continued to expand its physical stores.

It is reported that in 2018, Chanel will open a 600 square meter new shop in the suburb street of Saint orange, Paris. At the same time, shops on the 57 block in New York are also being renovated, and new stores will also be opened in Seoul and Tokyo.

In 2015, Chanel also announced that it would enter into e-commerce comprehensively. However, its attitude has been volatile. So far, Chanel has been trying to sell water, jewelry, glasses and cosmetic products to some electronic business platforms.

Now, Chanel's attitude towards the electricity supplier tends to be conservative. This means that in the short term, Chanel is unlikely to push the core business including garment accessories to the electricity supplier channel, and the strategy of entering the electricity supplier will be limited to some parts such as beauty makeup.

The rival LVMH has already taken the lead in implementing the strategy of electric business. This year, it officially launched the 24 S vres of self built electricity supplier, and took the lead in opening the Le Bon March e of entity department to online business, and moved towards the new retail mode of industry consensus.

24 S vres is undoubtedly a challenge that can not be ignored for the luxury industry including the Chanel and the whole electricity supplier structure.

In addition to Louis Vuitton, Chanel's second largest rival, Dior, is also undergoing full innovation.

Thanks to the younger initiatives of creative director Maria Grazia Chiuri, Dior's performance in the first quarter of this year has been greatly boosted. Sales rose 18% to 500 million euros in the three months to March 31st, and retail channel sales increased by 19% in real terms, compared with the same period last year.

It is noteworthy that the greatest threat to Chanel is the success of Dior's new product.

Maria Grazia Chiuri's products for Dior are really popular with the millennial generation of the future consuming main force. The star products of iconic star appear frequently. Whether it is feminist We Should All Be Feminists declaration T-shirt, or white ribbon J "ADIOR cat and shoe", it has become frequent in social media and street shooting in a short half year, and has become a strong driving force for sales.

As LVMH formally purchases Dior fashion department with 6 billion 500 million euros, LVMH group's two trump cards Louis Vuitton and Dior will exert more pressure on Chanel.

Some analysts pointed out that the disappearance of product and brand image is the most serious problem of Chanel at present.

The extravagant show is obviously also due to some misunderstandings of Chanel to the new generation of consumers. In the future, consumers' expectations of luxury brands are no longer an unreachable gorgeous setting, but a cultural and emotional interaction, not a luxury and wasteful comparison, but a contest of taste and personality.

For Chanel, defects have been exposed very clearly.

Blindness will only miss market opportunities and become dangerous. As pointed out by Maureen Chiquet, who left the Chanel global CEO in January last year, for Chanel, it is not how much it wants to do first, but how to keep it unique. Obviously, it must rely on product innovation.

Now, European tourism factors that are affecting the performance of Chanel 2016 are improving. Some analysts point out that Paris's tourism revitalization plan has achieved initial success.

According to the latest data released by the French government of Paris, the number of hotel occupancy in the big Paris area was close to 5 million 200 thousand in the first quarter of 2017, an increase of 12.5% over the previous year, reaching a new high in 10 years.

Among them, the number of local tourists in France increased by 9.9% compared with the same period last year, and the growth rate of foreign tourists increased by 16%. Among them, the highest growth rate was 62% for Japanese tourists, 51% for Russian tourists and 40% for Chinese tourists.

With the revival of tourism in Europe, the luxury industry is also ushering in a new round of growth.

In the first half of this year, LVMH group revenue and profits returned to double-digit growth, sales rose 14.6% to 19 billion 714 million euros, and net profit rose 24% to 3 billion 640 million euros.

Kai Yun group's total sales rose 28.2% to 7 billion 296 million euros, and its luxury sector revenue grew 29.7% to 5 billion 31 million euros, and its core growth engine Gucci sales rose 45.4% to 2 billion 832 million euros.

Sales of Dior fashion department rose 17.2% to 1 billion 47 million euros, while net profit rose 58% to 117 million euros.

Hermes Group sales increased 8.3% to 1 billion 360 million euros compared with the same period, while sales in the first half increased 9.7% to 2 billion 700 million euros.

Whether the improvement of market environment can boost Chanel performance or whether Chanel has begun to recognize its own problems will give answers.

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