Can Chanel Survive The Epidemic Without Electricity Supplier Channels?

Although brands such as Gucci and Louis Vuitton have set up detailed online shops in the past ten years, Chanel is like a lonely (electric business) resister. Most of the products can only be bought in Chanel's physical stores. This obsolete phenomenon is to help brands emphasize their position in the top of the luxury market.

But during the epidemic, when most shops around the world were closed, Chanel was in an unusual position.

The privately held French luxury magnate has closed all shops in Europe and the United States. Although Chanel sunglasses, perfume and beauty products can still be purchased online, there are no online channels for Chanel to bring huge profits to clothing, bags, shoes and jewelry.

Even if Chanel did not sell 2.55 packages during the quarantine period, it might also support the end of the epidemic. It is understood that the brand sales in 2018 amounted to $11 billion 100 million, operating profit of nearly $3 billion, analysts estimate that the cosmetic business accounted for about 1/3 of revenue.

Besides, the business of Chanel's competitors is not likely to bring much impetus to the brand. Bain said that online sales account for only 1/10 of the luxury sector. Recently, Bernstein and Boston Consulting Group conducted a survey, luxury executives expect this year's luxury industry revenue will fall by 30%.

"I do not think that the electricity supplier can solve the problem of closing stores at the moment. At present, it can only make up for a small portion of the loss of store sales," said Ortelli & Co partner Mario, a luxury consultancy. Ortelli said, "at this time, online operation is certainly a good thing, but if the epidemic duration is not long, a brand like Chanel can still stand the test even if it doesn't have an e-commerce platform."

Even if all the stores are closed, Chanel is looking for other ways to keep consumers concerned. (all its product pages and workshops have been closed. The brand is making use of workshops, factories and workers to produce masks. Chanel also donated 1 million 200 thousand euros to the French emergency center, and donated more than 50 thousand masks to hospitals and health care workers.

In the week of March 23rd, when Chanel remained silent on social media, the brand changed from advertising to advertising. On Friday, the brand's Instagram account hosted a Belgian singer Ang Le's personal online performance. She appeared in Chanel's latest Sunglasses ad. Chanel also released a light electronic song list on Apple Music, hoping to "accompany people to spend a good time at home."

The lack of Chanel's electricity business may be one of its advantages. Luca Solca of Bernstein (Bernstein) suggests that luxury brands should be "dormant" this year to stop manufacturing and reduce costs (and at the same time retain staff and shop rents as far as possible). In this way, the brand will not be bothered by excessive inventory and will not be sold at a discount when the store is reopened.

Chanel, the lucrative private holding brand, can follow this strategy well.

"I think Chanel can get rid of the new crown disease better than other brands," Solca said. "They are the biggest brands in the world and are ready to rebound strongly."

However, the new crown epidemic may shake the last batch of business operators resistance, let them reconsider their position. Another business dealer, the luxury watch brand Patek Philippe, began to allow its retail partners to sell selected products online.

Ortelli said that the lingering impact of the new crown disease, such as the long downturn in the travel industry and the increase in online transactions, will make the electricity supplier more attractive to luxury brands.

"After the outbreak, e-commerce services will become more and more important," he said. "This is a pillar of customer service and satisfaction."