There Are Many Problems In Chanel'S Internal Pformation.

According to the world clothing shoes and hats net,

Tycoon

(Chanel) sales for two consecutive years, net profit and double fall.

According to the 2016 earnings report submitted by Chanel group to the Holland Amsterdam business department, the sales volume of Chanel group reached US $5 billion 670 million in the 2016 fiscal year, down 9% compared with the same period last year. Net profit was 874 million US dollars, down 35% from a year ago.

Chanel's performance has declined for two consecutive years, while other luxury brands are gradually rising.

As a rare private monopoly company in the top luxury brands, Chanel's earnings have attracted much attention.

In fiscal year 2015, Chanel sales fell to $6 billion 240 million, down 17% from the same period last year, and net profit fell 23% to $1 billion 600 million over the same period.

According to the earnings report, in addition to sales and net profit declines, business profits also fell 20% to 1 billion 280 million US dollars in the fiscal year 2016, which led to a 22.5% decline in profitability. Although the decline of 25.7% has improved over the past year, it has not yet achieved the desired goal.

However, other luxury brands have made gratifying achievements in the past second quarters.

Burberry, LVMH and other groups achieved net profit growth of 9%, 13% and 15% respectively.

In addition, recently, Kai Yun group's earnings report showed that its luxury brand Gucci sales rose 43.4% to 2 billion 832 million euros.

Problems in Chanel's internal links

In fact, Chanel's poor performance is not unexpected.

One of the important reasons is the changes in the group's investment portfolio and organizational structure.

The group stripped its British subsidiary Chanel Limited UK and sold it to another company entity controlled by Chanel group, which sold about 11% of the group's total sales. Meanwhile, the group's beauty business Bourjois was sold to Cotti group (Coty Inc.) in 2015, which also led to a decrease in revenue in 2016.

If these two changes were eliminated, Chanel group's income remained stable in 2016.

Another important reason is the goodwill problem of Chanel group.

In 2015, Chanel began to implement the strategy of "global coordinated pricing". This strategy is mainly aimed at China, a luxury consuming country, hoping to promote sales in a short time by discount price.

However, in fact, the spread of the luxury goods industry is an important regulator to maintain the balanced development of the industry. The industry achieves its exclusive purpose through the spread of price. The price reduction undoubtedly weakens the importance of the spread in the luxury industry.

The "global coordinated pricing" strategy is not motivated by the loyal users of Chanel. Instead, it may lose some loyal customers and their purchasing power. When luxury goods become popular, they will deviate from the high-end luxury brand positioning.

In addition, Chanel's business development also has problems.

In cosmetic business, in April, the women's wear daily released the list of the top 100 global beauty companies in 2016. In 2015, the eighth ranked Chanel has fallen by the top ten, while the LVMH Beauty Department has taken the nine place beyond Chanel.

In April, the "Coco Caf e" store in Shanghai was no longer successful.

The perfume business has not made much breakthroughs in the past 15 years. Instead, it relies on the classic trump card products, Chanel No.5 and young faces, to win sales. This year's Gabrielle Chanel fragrance product named Coco Chanel will compete fiercely with Louis Vuitton and Gucci.

In addition, there is no innovation in the design of garments. Although the show is quite attractive, there is little difference in clothing every season.

"Transformation" has become the top priority.

At the beginning of its creation, Chanel was famous for its subversion of the traditional spirit of innovation, and this spirit has gradually blurred in many aspects.

What is more serious is that Chanel is not aware of the changes in the current consumer psychology. Grand show scenes, young artists' endorsement and publicity, and brand technology and classics are no longer the driving force for consumers to enter the store.

In this regard, LVMH is very successful, and its Louis Vuitton has launched a joint series with the street brand Supreme this year. The hot spread of social networking has attracted a lot of young consumers' crazy pursuit.

In addition, Chanel has always been cautious in terms of digitalization.

Unlike other luxury brands that have slowed down or stopped increasing physical stores, Chanel is still expanding its physical stores. Apart from opening 600 square meters of new stores in Paris, new stores will be opened in Seoul and Tokyo.

Rival LVMH has taken the lead in the pformation of electricity supplier. This year officially launched the self built electric business 24 S vres, and the entity department store Le Bon March e is connected with the online electricity supplier, pforming into a new retail mode.

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

Whether Chanel can seize this opportunity and comply with the deep market pformation needs to wait for further tests.

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