"CHANEL" - Management, Creation, Craft, Customers, and Capital that Built the World's Greatest Luxury Maison from Gabrielle Chanel to 2026 (Part 5) (Chapter 4: After Lagerfeld)

Chapter 4: After Lagerfeld

Section 1: 2019

2019 was the year one era ended for CHANEL.

On February 19, Karl Lagerfeld passed away.

For about 36 years since 1983, the person who had continuously updated CHANEL fashion for the modern age was suddenly gone.

However, understanding 2019 simply as "the year Lagerfeld died" is not enough.

What was questioned that year was a more fundamental issue.

Can CHANEL continue to be CHANEL even without its giant creator?

And looking at the developments after 2019, CHANEL's first answer to this question was not a sudden rupture.

It was succession.

—

The second great loss

CHANEL has experienced a similar problem before.

In 1971, Gabrielle Chanel passed away.

The era when the founder herself was the brand had ended.

After that, CHANEL experienced difficult times in terms of creation, and in 1983, Lagerfeld appeared.

He re-read the founder's codes.

Tweed.

Chain.

Pearls.

Camellia.

Black and white.

Bags.

Instead of preserving them, he repeatedly updated them for the 1980s, 1990s, 2000s, and 2010s.

And then 2019.

This time, that "updater" was gone.

CHANEL faced its second major succession problem.

—

1971 and 2019 are not the same

However, there is a decisive difference between the two points in time.

What was lost in 1971 was the founder.

What was lost in 2019 was the person who had been updating the founder's legacy for about 36 years.

In other words, in 2019, CHANEL already had two layers of history.

Gabrielle Chanel
＋
Karl Lagerfeld

is what it was.

The next creator cannot read only Gabrielle Chanel.

The CHANEL that Lagerfeld created had also already become part of history.

A brand becoming long-lived does not just mean it gets older.

It also means the layers of time that must be inherited increase.

—

An exceptional length of 36 years

A period of about 36 years is extremely long.

If one creative director shapes the visual world of a maison for such a long period, the boundary between the brand and the individual inevitably narrows.

When thinking of a CHANEL show, there is Lagerfeld.

When thinking of advertisements, there are his photographs.

Bold reinterpretation of tweed.

The massive Grand Palais.

Supermodels.

Double C.

Accessories.

Bags.

The vast collection every season.

For the world's fashion media as well,

CHANEL and Karl Lagerfeld

were very strongly linked for a long time.

Therefore, his death was different from a normal designer change.

It meant the end of an era of a huge brand image.

—

Even so, CHANEL did not stop

Here, the strength of CHANEL as a company appears.

Just because Lagerfeld passed away did not mean that the corporate activities themselves stopped.

Boutiques operate.

Products are sold.

N°5 exists.

Bags are made.

There are also watches and jewelry.

Craftsmen work.

The atelier exists.

Relationships with customers continue.

And there is an organization preparing the next collection.

This fact is important.

By 2019, CHANEL had changed from a brand that could only exist with one genius to a huge company that had one genius inside it.

Individuals are extremely important.

However, companies can exist longer than individuals.

This condition was met.

—

Virginie Viard

After Lagerfeld's death, it was Virginie Viard who took over CHANEL's fashion division.

This personnel choice has meaning.

Viard was not a star designer suddenly brought in from the outside.

She was a person who had worked with Lagerfeld inside CHANEL for many years.

In other words, in 2019, CHANEL chose succession over rupture.

This is in contrast to 1983.

What was needed at that time was to strongly revitalize the brand.

In 2019, CHANEL was already one of the world's top luxury maisons.

The problem was not regeneration.

It was to pass on a successful, huge brand to the next stage without destroying it due to the death of its creator.

—

"Connecting" before "changing"

In management, when a leader changes, reform is expected.

New strategy.

New organization.

New products.

New brand image.

However, in long-lived brands, change itself is not necessarily value.

CHANEL already has:

Over 100 years of history.

Global brand recognition.

A huge customer base.

Craftsman network.

Product codes.

Archives.

Store network.

Price structure.

If you change rapidly here, it could become damage rather than reform.

That is why what was important in 2019 was "Continuity" rather than "Change".

—

The last show

After Lagerfeld's death, the Autumn/Winter collection announced in March 2019 became the last collection prepared under his and Viard's names.

A world reminiscent of a snow-covered mountain village was created in the Grand Palais.

Huge production.

Tweed.

Snow.

Mountains.

Models.

There remained the spectacle typical of CHANEL in the Lagerfeld era.

But at the same time, it was also an end.

One era of the show culture he created was closing.

And the time begins for Viard to take on the next CHANEL alone.

—

Not "from woman to woman"

Here, explaining the succession to Viard simply as a "return to a female designer" is not enough.

Gabrielle Chanel was a woman.

Viard is also a woman.

However, if you connect the two based on that alone, you overlook the corporate changes that occurred over about 100 years.

What is important is not gender, but that creative knowledge had been accumulated inside the company called CHANEL.

Viard knows the atelier.

She knows clothing production.

She knows Lagerfeld.

She knows CHANEL's production process.

She knows the human relationships inside the maison.

In other words, the succession in 2019 needs to be seen as a case where knowledge accumulated within the organization supported the next creation, while also being a succession from individual to individual.

—

The value of the inconspicuous

A person like Lagerfeld stands out.

He appears at the end of the show.

He is photographed.

His remarks are reported.

He is known all over the world.

However, to create one piece of CHANEL, a vast amount of inconspicuous work is necessary.

Pattern.

Sewing.

Embroidery.

Feathers.

Pleats.

Buttons.

Shoes.

Hats.

Material procurement.

Fitting.

Production.

Quality control.

Logistics.

Sales.

Repair.

CHANEL is not one designer.

What was paradoxically revealed by Lagerfeld's death was the existence of the huge corporate organization that supported him.

—

Can creation be organized?

The question presented by 2019 also applies to the entire fashion industry.

Creativity depends on individual talent.

However, companies must continue.

How do you balance these two?

If you completely manualize creation, originality is lost.

On the other hand, if you rely entirely on one genius, the company falls into crisis the moment that person is gone.

Therefore, long-lived luxury companies need difficult management that maximizes individual creativity while leaving its results as organizational assets.

CHANEL's archives, craftsmen, ateliers, brand codes, shows, and product groups were one answer to this problem.

—

CHANEL as a company in 2019

Furthermore, in 2019, CHANEL was also different from before in terms of corporate information.

As a private company, CHANEL had not disclosed detailed financial information to the outside world for many years like listed companies.

However, in 2018, CHANEL Limited published its annual financial results for the first time.

This was an important change.

CHANEL, which was one of the world's leading luxury companies but whose reality was difficult to see from the outside, began to show certain financial information to the world.

What became visible from this was the reality that CHANEL was not just a historical fashion maison, but a huge company with a business scale exceeding 10 billion dollars.

In 2019, sales had grown to a scale exceeding 12 billion dollars.

The CHANEL that Lagerfeld left behind had become a global company with extremely strong management strength, while also being a cultural icon.

—

The meaning of being private

Moreover, CHANEL is not listed.

It is different from a structure that demands quarterly profit growth from the stock market.

This becomes important for understanding the later CHANEL.

Investment in craftsmen.

Investment in workshops.

Real estate.

Stores.

Supply chain.

Environment.

Human resources.

Such investments do not necessarily generate profits in the short term.

However, they become necessary if you are to pass the brand on for decades, and even to the next 100 years.

In 2019, CHANEL had not only the succession of creation but also the structure of long-term capital to support it.

—

And the world changes the following year

Looking back at 2019 from the present, another important meaning becomes visible.

It was the last year before the pandemic.

As of 2019, the global luxury industry was deeply linked to international travel, huge stores, cities, shows, tourism consumption, and face-to-face customer service.

However, in 2020, due to the global spread of the new coronavirus, that premise collapsed all at once.

Borders closed.

Stores closed.

The way shows are held changed.

Tourists disappeared.

Customers buy in their own countries.

The relationship with digital changed.

The supply chain also shook.

In other words, CHANEL would face the change of the world itself immediately after losing Lagerfeld.

—

Two changes overlapped

The difficulty for CHANEL around 2019 lies here.

Internally, a Creative Transition occurs.

From Lagerfeld to Viard.

Immediately after that, externally, a Global Transition occurs.

Due to the pandemic, the world's consumption, movement, stores, and ways of working change.

Normally, after losing a huge designer, time is needed to stabilize the inside of the brand.

However, CHANEL was given almost no such time.

It was necessary to respond to the crisis while succeeding.

—

2019 was not an end point but a boundary

Therefore, 2019 should not be seen only as the "end" of the Lagerfeld era.

More accurately, it is the boundary that separates two CHANELs.

Before that was a time of:

Gabrielle Chanel's codes

↓

Continuous updating by Karl Lagerfeld

↓

Expansion into a global brand

After that, it enters another time of:

Lagerfeld's legacy

↓

Succession by Virginie Viard

↓

Pandemic

↓

Redesign of price and scarcity

↓

Re-transformation in 2024

—

Proof that "it continues even if the creator changes"

And in 2019, CHANEL's ability as a 100-year company was tested again.

It continued even after losing the founder.

Will it continue even after losing the updater?

The answer to that is not something that comes out in one collection.

It is shown over several years.

But at least CHANEL did not stop.
The archives remained.
The craft remained.
The customers remained.
The organization remained.

The capital remained.

And there was a new creator.

This is important as corporate history.
A long-lived company is not a company that does not change.
It is a company that can pass value on to the next person even after losing important people.
In 2019, CHANEL was asked that ability once again.
And the first successor to that was Virginie Viard.
Her job is not to compete with Lagerfeld.
It is not to reproduce Gabrielle Chanel either.
It was to carry CHANEL to the next time while carrying the history of two giants.
Section 2: Virginie Viard

What does the job of "succeeding" mean after a huge creator?

Section 2: Virginie Viard

In 2019, CHANEL lost a huge creator due to the death of Karl Lagerfeld.

It was Virginie Viard who took over.

What is important in understanding this personnel decision is not to see Viard only as "Lagerfeld's next star designer".

Her role was more special.

When Lagerfeld joined CHANEL in 1983, what was required was revitalization.

On the other hand, CHANEL in 2019 was already one of the world's top luxury maisons.

So what was first required of Viard was not to change CHANEL into a different brand.

It was to not let creation stop after a huge success.

—

She was not a revolutionary who came from the outside

Viard is not a person who was recruited from the outside with almost no knowledge of CHANEL.

She joined CHANEL in 1987 and spent a long time inside the maison.

After leaving CHANEL for a period, she continued to work with Lagerfeld and returned to CHANEL in 1997.

After that, she became one of the central figures supporting the production of haute couture and ready-to-wear.

What she knew deeply was not just the appearance of the finished clothes.
How clothes are made.

How designs turn into concrete garments.

How to work with the atelier.

How to handle materials.

How to repeat fittings.

How to complete a collection by the show.

In other words, Viard knew not only the front side of CHANEL but also the internal processes until creation becomes an actual product.

—
The person who was next to Lagerfeld

The fact that she had been involved for many years in the work of translating Lagerfeld's creation into actual collections had great significance in the succession of 2019.

Clothes are not completed by the designer's ideas alone.

Sketch.

Material.

Pattern.

Sewing.

Embroidery.

Fitting.

Correction.

Accessories.

Styling.

Show.

It is necessary to integrate the work of a vast number of people into one collection.

To support Lagerfeld's phenomenal production volume, strong organizational ability to connect creation and production was necessary.

Viard was inside that.

Therefore, the succession to her is not a simple composition of "change from famous designer A to famous designer B".

It was also an event where creative knowledge that had been accumulated inside CHANEL for many years came out to the front stage.

—

"Invisible work" becomes visible

In the luxury industry, attention tends to be focused on finished products and famous designers.

However, it is not necessarily only the most prominent people who support a company for a long time.

Craftsmen.

Pattern makers.

Studio.

Production managers.

Material experts.

Sales staff.

Store managers.

Management.

There are many such people.

Viard's appearance also symbolized that CHANEL is established by such accumulation of organizations.

After an extremely strong individual named Lagerfeld, his long-time collaborator succeeded him.

There, CHANEL's corporate structure appeared, showing that "individual creativity and organizational continuity are not contradictory".

—

What not to change

When a new creative head takes office, usually "what to change" is focused on.

However, in Viard's early days, the opposite question was more important.

What not to change.

Tweed.

Camellia.

Chain.

Pearls.

Black and white.

Bags.

Haute couture.

Métiers d'art.

CHANEL has powerful codes that cannot be easily discarded.

Furthermore, there is also a new history formed during the Lagerfeld era.

Viard received that huge asset.

So her job was not to write a new brand on a blank sheet.

It was to write the next line on a brand where layers of history were already written.

—

A quieter CHANEL than Lagerfeld's

CHANEL in the Viard era often changed in a direction that was lighter, more intimate, and closer to the body than in the Lagerfeld era.

Lagerfeld was good at huge productions.

Turning the Grand Palais into another world.

Placing a rocket.

Building an airport.

Building a supermarket.

Making the show itself global news.

Viard did not need to compete and enlarge the same method as it was.

Clothes.

Body.

The wearer.

Material.

Movement.

CHANEL's codes.

Room is born to return the gaze to them.

This is not a denial of Lagerfeld.

Rather, it was an attempt to create a different time for CHANEL by not doing the same thing as him.

—

You cannot succeed by copying

There is an important problem here.

If the successor of a great predecessor does the same thing as the predecessor, it looks safe.

However, if you continue that, the brand gradually becomes an imitation of the past.

What Lagerfeld himself proved was that CHANEL cannot continue to live even if you copy Gabrielle Chanel as she was.

The same logic applies after Lagerfeld.

To succeed Lagerfeld, you do not need to become Lagerfeld.

Rather, you need to choose "what to leave, what to weaken, and what to change".

Succession is not replication.

—

Returning to the female body

In thinking about Viard's work, the relationship with the body is also important.

In CHANEL's origins, there is a history of liberating the female body from existing clothing norms.

Jersey.

Ease of movement.

Sports.

Pockets.

Shoulder bags.

Citations from men's clothing.

Gabrielle Chanel's creation was deeply linked not only to abstract beauty but also to "how women live and how they move".

In Viard's collections, the aspects of lightness of the body, movement, and clothes that can be worn in reality often came to the fore.

Here, from behind the huge shows and symbols, we can see once again the relationship between "clothes and the body" at the origin of CHANEL.

—

Because she is a woman, is not enough

Gabrielle Chanel.

Virginie Viard.

Because both are women, it can also be explained as a simple "return to CHANEL by women for women".

However, that alone is shallow.

What is important is not gender itself, but multiple relationships such as:

Who makes the clothes?

Who wears them?

What kind of body is assumed?

What kind of life is assumed?

What kind of organization makes decisions?

In CHANEL's history, the relationships between the female body, creators, craftsmen, sales staff, customers, and managers have always influenced brand value.

The Viard era was also a new stage to think about those relationships.

—

And the pandemic comes

However, Viard did not have a stable transition period like those given to normal successors.

In 2019, she took over creation from Lagerfeld.

The following year, 2020.

The global spread of the new coronavirus begins.

This shook the very premises of the fashion industry.

Stores are closed.

Cross-border travel stops.

Customers do not move.

The way shows are held changes.

The supply chain is confused.

The way staff work changes.

International tourism consumption drops sharply.

Viard was forced to not only succeed a huge predecessor but also to continue CHANEL's creation in the midst of a global crisis.

—

The meaning of shows also changes

Before the pandemic, luxury fashion shows had become huge.

People gather from all over the world.

Models move.

Customers move.

Journalists move.

Huge sets are built.

That situation is delivered to the world.

However, when human movement is restricted, that model becomes difficult to establish.

Therefore, the importance of digital video and new announcement methods increases.

Fashion shows further strengthened their character from "events that gather people at the venue" to "media that delivers a worldview to people in distant places".

This affects not only Viard's individual creation but also the media strategy of the company called CHANEL.

—

Products return to the body

The pandemic also changed people's lives themselves.

Going out.

Work.

Travel.

Parties.

Dining out.

Urban life.

These temporarily shrank.

Then fashion is returned to fundamental questions.

Why do people wear clothes?

Who do they show them to?

What is comfortable for one's own body?

What is the value of expensive clothes?

The "CHANEL close to the body" of the Viard era eventually overlaps with this social change.

—

Brands do not stop time even in crisis

What was important during the pandemic was that CHANEL did not stop its creative activities.

Announcing collections.

Continuing work with craftsmen.

Maintaining contact points with customers.

Communicating the brand's world.

You cannot pause CHANEL only during the crisis and restart it after the world returns to normal.

Fashion moves by season.

There is also employment of craftsmen.

There are also stores.

There is also a relationship with customers.

Therefore, companies need the ability to continue creation even in the midst of a crisis.

The Viard era was a time when exactly that ability was tested.

—

Roles that cannot be measured by sales alone

There is a limit to evaluating creative directors only by short-term sales.

Especially in companies like CHANEL, these mutually influence each other:

Brand image.

Bags.

Haute couture.

Ready-to-wear.

Fragrance.

Beauty.

Watches.

Jewelry.

Stores.

Price.

Customer relationships.

Past brand assets.

Clothes of a certain season do not correspond directly to the profits of the next quarter.

To understand Viard's role, it is necessary to see that she took on the bridge that carried CHANEL's brand value from 2019 to the next creative system.

—

CHANEL grows even more

In fact, in the first half of the 2020s, including the Viard era, CHANEL's business scale expanded significantly.

After receiving a temporary blow from the pandemic, global luxury demand recovered rapidly.

CHANEL also grew significantly against the backdrop of:

Price.

Product composition.

Customer demand.

Store investment.

Wealthy market.

In 2023, it reached a scale where annual sales approached approximately 20 billion dollars.

What is important here is that the company grew even after Lagerfeld was gone.

This shows that CHANEL's value did not depend on just one designer.

—

A new problem called price

On the other hand, with growth, another change becomes conspicuous.

Price.

CHANEL significantly raised the prices of its main products in the first half of the 2020s.

In the background are:

Raw material costs.

Labor costs.

Exchange rates.

Logistics.

Investment in quality.

International consistency of prices.

Brand positioning.

Scarcity.

There are multiple factors.

However, as a result, CHANEL's representative bags moved to a price range that only more limited customers can purchase.

From here, a new question arises in CHANEL's management.

Is raising prices the same as raising brand value?

This problem goes beyond Viard as an individual and becomes an important theme for thinking about the entire CHANEL of the 2020s.

—

From the succession period to the next transformation

As a few years pass from 2019, the conditions surrounding CHANEL change again.

The world restarts from the pandemic.

International travel returns.

China's economic growth slows down.

The growth rate of the luxury market also changes.

Customers look more strictly at the value of products that have become high-priced.

And the brand is once again required to have creative appeal that cannot be explained by price alone.

Viard's CHANEL also gradually moves from just "success of succession" to an evaluation of "how much of the next CHANEL can be presented".

—

2024

In June 2024, CHANEL announced the resignation of Virginie Viard.

The relationship with CHANEL spanning about 30 years, of which about 5 years as the head of the fashion division, ends.

With this resignation, one succession period that had continued since 2019 closed.

From Lagerfeld to Viard.

It was a time to pass CHANEL on to the next without breaking it.

However, CHANEL does not stop there.

What is needed next becomes the question of "who will create CHANEL in the late 2020s" rather than "how to succeed after Lagerfeld".

—

What Viard left behind

If you evaluate the Viard era only by comparison with Lagerfeld, you will misunderstand its meaning.

She had a different role.

She continued CHANEL after the death of a huge creator.

She overcame the pandemic.

She protected continuity with the atelier.

She maintained CHANEL's codes.

She carried the brand to the next creative system.

In other words, her work had its center of gravity in "Continuity rather than Reinvention".

However, long-lived brands need that time.

If every generation causes a revolution, the brand is not inherited.

Not only people who change, but people who connect are needed.

—

Three different jobs

CHANEL's creative history so far can be organized as three different jobs.

Gabrielle Chanel

Create.

↓

Karl Lagerfeld

Re-read and expand.

↓

Virginie Viard

Connect.

There is no need to evaluate these three by the same standard.

Founding.

Updating.

Succession.

Each is needed at different phases of the company.

And it was because it passed through the Viard era that CHANEL was able to move to the next stage.

—

What was needed next was Update

In 2024, a blank was born again at CHANEL due to Viard's resignation.

However, the situation is different from 2019.

This time, it is not a succession due to sudden death.

The next creator can be chosen.

Moreover, on the corporate side, Leena Nair had been serving as global CEO since 2022.

In other words, at CHANEL, "a new time of management" had already begun.

It is necessary to connect the next time of creation to that time of management.

And in December 2024, CHANEL announced that it would appoint Matthieu Blazy as the new Artistic Director of the fashion division.

Beyond the "succession" that Viard took on, a time of "updating" was about to begin again.

But there is something that must be understood before that.

The essence of the work CHANEL had been doing during Viard's approximately 5 years.

It is not just preserving the past.

Not breaking the huge history, and passing it on in a state where the next creator can move it again.

That is exactly the job called "succession" in a long-lived maison.

Section 3: The job of succession

In the next section, through the case of CHANEL, we will look deeper into why a "successor" who is neither a founder nor a revolutionary designer is indispensable for a 100-year company.

Section 3: The job of succession

Succession is not about not changing.

However, it is not about changing either.

For companies with a long history, the most difficult thing lies in between.

What to leave.

What to change.

What to leave for a while while keeping it in a state where the next generation can change it.

Looking at CHANEL after 2019, the meaning of the job called "succession" becomes clearly visible.

Gabrielle Chanel founded it.

Karl Lagerfeld performed a huge update.

What Virginie Viard took on was a job different from those two.

It is to pass on the huge value already formed to the next time without breaking it.

—

Companies need not only revolution but also succession

In corporate history, managers and creators who performed major reforms tend to attract attention.

Created new products.

Changed the market.

Regenerated the brand.

Rapidly expanded sales.

Such events are easy to understand.

However, it is not only revolution that builds a 100-year company.

Maintain the value once created.

Pass on technology to the next generation.

Do not break trust with customers.

Stabilize the organization.

Preserve the past.

And maintain a state where the next change is possible.

Such work is difficult to see from the outside.

However, it is indispensable for a company to last a long time.

If every generation denies its predecessor and performs a total renewal, accumulation will not remain in the company.

Conversely, if no one changes anything, the company becomes old.

Therefore, long-term companies need different abilities of:

Creation

Renewal

Continuity

—

The object of succession is not just products

Let's think about what CHANEL must succeed.

Tweed jacket.

Bag.

N°5.

Camellia.

Pearls.

It is not just these products and codes.

Craftsman technology.

Atelier.

Knowledge about materials.
Fitting methods.

Quality standards.

Customer service in stores.

Relationship with customers.

Archives.

Prime location stores.

Brand credit.

Relationship with business partners.

Organizational culture.

And accumulation of management decisions.

Corporate value is multi-layered.

Therefore, succession also becomes multi-layered.

Selling one product in the next year and passing the entire company on to the next generation are completely different.

—

Explicit knowledge and tacit knowledge

What is important in understanding the difficulty of succession is the type of knowledge.

Companies have knowledge that can be recorded.

Blueprints.

Specifications.

Contracts.

Sales data.

Financial records.

Material information.

Archives.

These can be saved as documents or data.

On the other hand, there is also knowledge that cannot be easily recorded.

How much tension is beautiful for this tweed?

How far should the sleeve be adjusted so the body moves naturally?

How much embroidery should be applied so it is not excessive?

When and what should be proposed to important customers?

Where is the boundary that feels "a little different" for the brand?

Such judgments are acquired through experience.

This is tacit knowledge.
In companies like CHANEL, this tacit knowledge is very large.
—

From craftsman to craftsman

Craftsmanship is typical of this.

It is difficult to completely succeed advanced embroidery technology with just text.

See it in person.

Move your hands.

Fail.

Receive guidance from experts.

Remember the habits of materials.

Accumulate long experience.

Here, transfer from person to person is necessary.

Therefore, protecting craftsman technology is not just preserving old works.

It is maintaining the relationship between the person who has the technology and the person who will have the technology next.

Succession essentially includes human relationships.

—

Not from designer to designer

The same can be said for creative direction.

It is not that one manual was passed from Lagerfeld to Viard.

Work together for many years.

Look at sketches.

Look at fittings.

Look at material selection.

Look at judgments.

Look at corrections.

Look at conversations with the atelier.

Look at what is adopted and what is discarded.

Through the accumulation of such time, the method of work is transmitted.

The fact that Viard was inside CHANEL for many years has meaning here.

She was not just looking at Lagerfeld's finished products.

She knew the judgment process before completion.

—

Preserving brand codes is not enough

Black and white.

Tweed.

Camellia.

Quilting.

Chain.

Pearls.

Double C.

Leaving these to the next generation is relatively easy to understand.

However, what is really difficult is how to use them.

How much to use.

Which combination is modern.

How far can you change.

When to dare not to use them.

Even with the same code, products are completely different depending on that judgment.

Therefore, brand succession must be "not preserving the code, but succeeding the ability to handle the code".

—

Do not fix "CHANEL-ness"

This is very difficult.

If you make the definition of "CHANEL-ness" too strict inside the company, the next creator will not be able to do anything.

Must use black.

Must use tweed.

Must place camellia.

Must protect past silhouettes.

If this happens, brand codes become rules.

On the other hand, if you say "anything is CHANEL", the brand's boundaries are lost.

In succession, it is necessary to leave a margin in between.

Maintain a certain identity.

But also leave space for the next creator to bring in their own interpretation.

Succession is not to complete too much.

—

Leave a blank

This is a very important way of thinking for long-lived brands.

If the predecessor defines everything about the brand, only copies remain for the successor.

Conversely, if nothing of the brand's foundation is defined, succession itself cannot be done.

What is needed is "leftover codes + margin for new interpretation".

The codes left by Gabrielle Chanel had that margin.

That's why Lagerfeld could re-read them.

Lagerfeld also left behind a huge CHANEL.

However, not making it a permanent correct answer is important for the next generation.

—

Succession also includes the judgment of "doing nothing"

In management, what you have acted on is easily evaluated.

New products.

New stores.

New strategy.

New organization.

However, in the succession period, the judgment of "not changing" itself has value.

Leave products that customers love.

Protect skilled craftsmen.

Maintain quality standards.

Continue relationships with long-time business partners.

Do not change brand codes suddenly.

Such judgments look like nothing is being done from the outside.

But in reality, it is "active management that does not damage existing assets".

Especially in luxury, it is difficult to regain trust once lost.

—

Succession and customers

It is not only the inside of the company that is succeeded.

Customers also have time.

Buy perfume when young.

Buy a bag for the first time.

Start working.

Buy jewelry at life milestones.

Go to the same boutique for many years.

Pass products to family.

Such relationships sometimes continue for decades.

If the brand side changes rapidly, long-term customers may feel they have lost the CHANEL they have loved.

Therefore, succession is also "not breaking the memory of the company and the memory of the customer".

—

However, customers also change

On the other hand, it is not that you only need to protect existing customers.

New generations also enter CHANEL.

Young customers.

New wealthy class.

New regions.

Different cultures.

People who do not know the past CHANEL.

For them, there are cases where showing history as it is does not convey the meaning.

Therefore, companies need to "give continuity to long-term customers and give contemporaneity to new customers".

This is also a difficult dual task of succession.

—

Succession and price

Price is also related to succession.

For customers who have known CHANEL for many years, if products with the same name raise prices significantly in a few years, the relationship with the brand changes.

On the other hand, the company side has factors such as:

Raw materials.
Labor costs.
Logistics.

Exchange rates.

Store investment.

Craft maintenance.

Brand positioning.

Therefore, not changing prices is not necessarily succession.

However, if only price changes first and the creativity, quality, and service felt by customers do not catch up, it could also mean consuming the trust accumulated from the past.

From here, the problem of "price and scarcity" in CHANEL in the 2020s emerges.

—

Succession is tested in times of crisis

In normal times, you can continue past methods.

However, a crisis comes.

Pandemic.

War.

Economic recession.

Confusion in raw material supply.

Exchange rate fluctuations.

Change of managers.

Change of designers.

At that time, the company must choose what it really should protect.

The pandemic after 2020 was exactly that test for CHANEL.

Must close stores.

Customers cannot move.

Must change the format of shows.

Even so, brand value must continue.

Succession ability is visualized in the midst of such crises.

—

Preservation and adaptation

From here, the basic structure of succession is visible.

Not just protecting.

Not just changing.

It is Preservation × Adaptation.

Things to protect:

Brand credit.

Craftsmanship.

Quality.

History.

Important codes.

Trust with customers.

Things to change:

Expression.

Product composition.

Shows.

Distribution.

Technology.

Price.

Organization.

Regional strategy.

It is necessary to move both at the same time.

—

Connecting things with different times

Inside CHANEL, different times exist.

Fashion collections are a few months.

Bags are used for years and decades.

Craftsman training is long-term.

Store real estate is also long-term.

Customer relationships are decades.

Brand codes are over 100 years.

The tenure of managers and designers is in between.

Succession is connecting these different times without cutting them.

If you only look at the season, you cannot build a 100-year brand.

If you only look at 100 years, you cannot create this season's fashion.

Having short time and long time at the same time.

That is necessary for maison management.

—

Successors are not completers

When looking at Viard's role from this perspective, its meaning becomes clear.

Her job is not to complete CHANEL into a final form.

In the first place, there is no final form for a 100-year company.

Pass it on to the next person.

That person changes it further.

Pass it on to the next again.

Therefore, what is required of a successor is not to use everything up in their own era.

It is to leave a state where the next generation can still create.

This is common to company owners, managers, and craftsmen.

—

From Viard to Blazy

In 2024, Viard resigned, and in December of the same year, the appointment of Matthieu Blazy was announced.

Here, Viard's succession has one result.

CHANEL was not broken.

Archives exist.

Craftsmen are there.

Brand codes are strong.

Customers are there.

The company has huge investment ability.

And the next creator can read CHANEL's history anew.

In other words, succession enables the next update only after it succeeds.

—

Succession and update do not conflict

This is important.

There is no need to make Continuity and Update conflict.

Rather, they are in a relationship where:

You can update because there is succession.

Because there is an update, what is succeeded has value in the next era.

Because Gabrielle Chanel's codes remained, Lagerfeld could update.

Because Lagerfeld's creation and corporate organization remained, Viard could continue.

Because Viard continued, Blazy can start a new update after that.

Corporate time continues not by disconnected leader changes, but by the previous generation creating conditions for the next generation.

—

Succession is leaving the past for the future

When you say succession, it looks like an act of protecting the past.

However, the essence is in the future.

Leaving craftsman technology is not because it is old technology.

It is because you can create future products.

Leaving archives is not just to miss the past.

It is because future designers can read them.

Leaving brand codes is not because they are old rules.

It is because it makes future products recognizable as CHANEL.

Protecting trust with customers is not just because they bought products in the past.

It is because there is a possibility that the relationship will continue in the future.

In other words, succession is a job of leaving the past as a resource for the future.

—

The meaning of 2019 to 2024

Looking from this perspective, Viard's approximately 5 years are not a blank in CHANEL history.

It is not that nothing happened between the Lagerfeld era and the Blazy era.

In between, these overlap:

Death of a huge creator.

New succession.

Pandemic.

Change in customer behavior.

Rapid sales recovery.

Significant price increase.

Scarcity strategy.

Change in corporate management.

And selection of the next designer.

During this period, CHANEL did not just continue to make clothes.

It maintained the corporate state to move to the next era.

—

Problems appearing beyond succession

However, it will not continue forever with succession alone.

The market moves.

Prices rise.

Customer expectations also rise.

Competitors also change.

The stronger the brand, the higher the level required for the next creation.

And in the first half of the 2020s, price and scarcity become conspicuous as major management features at CHANEL.

There, multiple factors overlap, such as post-pandemic global luxury demand, supply constraints, inflation, exchange rates, quality investment, global price adjustments, and brand positioning.

It is not just a problem of price increases.

It also leads to the question of "who is CHANEL a brand for?".

However, there is a global rupture that became the premise for that.

It is the pandemic that started in 2020.

Stores.

Travel.

Shows.

Customers.

Supply chain.

Ways of working.

The conditions that supported global luxury wavered all at once.

In the next section, we will look at what CHANEL protected and what it changed in the midst of that crisis.

Section 4: Pandemic and Luxury

When the world could no longer move, how did luxury, which had been supported by movement, stores, bodies, and face-to-face experiences, maintain its value?

Section 4: Pandemic and Luxury

In 2020, the global luxury industry lost the premises it had taken for granted all at once.

People move.

Gather in cities.

Travel abroad.

Enter boutiques.

Touch products.

Talk to sales staff.

People gather for fashion shows.

Customers from all over the world shop in Paris, London, New York, Tokyo, Hong Kong, etc.

Through these actions, the huge market of modern luxury was established.

The global spread of the new coronavirus stopped that flow.

For CHANEL, it was not just a temporary decrease in sales.

Immediately after losing Karl Lagerfeld in 2019 and starting succession to Virginie Viard, a crisis visited that tested the very basic structure of luxury: brand, store, body, movement, and customer.

Luxury is a physical industry

Even if digitalization progresses, strong physicality remains in luxury.

Wear a jacket.

Carry a bag.

Wear jewelry.

Try perfume.

Apply cosmetics to the skin.

Wrap a watch around the arm.

Touch materials.

Look in the mirror.

Talk to sales staff.

Human senses and contact become more important than normal product purchases.

CHANEL is typical of this.

Because it is a maison that has valued its relationship with the body since its founding.

However, in the pandemic, contact between people and things, and between people and people, was restricted.

This presented a fundamental contradiction to CHANEL.

How does a brand that has built value centered on the body exist in a world where physical contact is restricted?

—

Stores close

As a response to the spread of infection, commercial facilities and boutiques were temporarily closed all over the world.

There is a major impact on the luxury industry.

CHANEL boutiques are not just product warehouses.

Location.

Architecture.

Interior.

Product placement.

Customer service.

Fitting.

Conversation with customers.

The whole thing creates a brand experience.

Therefore, the closing of stores had a meaning beyond losing one sales channel.

The physical entrance to the world called CHANEL closes.

Here, the company was forced to maintain the relationship with customers that it had previously conducted inside stores in other ways.

—

Tourists disappear

In the global luxury market before the pandemic, consumption by international travelers was extremely important.

Wealthy people in Asia, including China, visit Europe.

Japanese people purchase in Paris.

Americans buy in Europe.

Travel itself and luxury consumption were linked.

However, borders close.

Flights decrease.

Tourists disappear.

Then, the demand that had occurred at travel destinations also disappears.

Here, one change occurred.

From a model where customers move around the world seeking products, the weight shifts to a model where the brand deepens relationships with customers in each region.

This was an important change in thinking about CHANEL's store strategy and customer strategy after the pandemic.

—

Rediscovery of Local Clients

If you cannot travel internationally, Tokyo customers are in Tokyo.

Paris customers are in Paris.

New York customers are in New York.

Companies become forced to build more direct relationships with customers in their own countries and regions.
For many years, luxury companies have valued traveler demand, but the pandemic highlighted the value of local customers again.

Not customers who purchase only once while traveling.

Go to the same store for a long time.

Build relationships with sales staff.

Have them understand your tastes.

Have them introduce new products.

Receive service after purchase.

These are such relationships.

For CHANEL, this was also a movement returning to the maison-like customer relationship it originally had.

—

Pressure called digitalization

If stores close, naturally the importance of digital increases.

Online information.

Video.

SNS.

Remote communication with customers.

Digital customer service.

Luxury companies were also forced to rapidly review their relationship with digital.

However, for CHANEL, simple EC conversion was not the answer.

The higher the price of the product, the more customers want to see the real thing.

Want to touch.

Want to try.

Want to talk to sales staff.

The brand side also wants to strictly manage the product sales environment.

Therefore, what became important was not an either-or of "Physical or Digital".

It was a problem of how to use digital not as a substitute for physical customer experience, but as a complement.

—

Audiences disappear from fashion shows

The pandemic also directly affected fashion shows that had become huge in the Lagerfeld era.

Gather customers, editors, journalists, and celebrities from all over the world.

Build a huge space.

Create a one-time event there.

That model became difficult to establish.

Then the essence of the show is questioned again.

Can you announce a collection even if the audience is not at the venue?

Yes, you can.

Just deliver it as a video.

However, simple recorded video is not enough.

How to deliver the movement of clothes, materials, atmosphere, and stories to people watching on the screen.

From here, the importance of fashion video itself increases.

Runways further strengthened their character from "Physical Event" to "Media Content".

—

You cannot expand Lagerfeld's legacy as it is

This was a symbolic transformation for CHANEL.

Lagerfeld completed a huge show space.

However, the pandemic exposed the vulnerability of continuing to physically expand huge events.

People cannot gather.

Cannot move.

Even if you build a set, there is no audience.

From here, value other than the size of the scale becomes important.

Clothes themselves.

Video.

Story.

Craftsmanship.

Relationship with customers.

In other words, luxury was once forced to return its gaze from "Expansion to Depth".

—

What are clothes for?

Life also changed.

Working from home.

Going out restrictions.

Cancellation of events.

Stop of travel.

Decrease in dining out with many people.

The scenes where people wear clothes themselves changed.

Then fundamental questions return to fashion.

Who do you wear for?

Is it comfortable for the body?

Is there value in using it for a long time?

Is luxury necessary even if time spent at home increases?

Looking back at CHANEL's history, this is not a strange question.

Because Gabrielle Chanel herself was a person who thought about clothes from the actual life and body of women.

It can also be thought that the pandemic brought CHANEL 100 years later closer to that origin once again.

—

Demand did not disappear

In the early pandemic, the luxury market received a major blow.

However, interestingly, demand itself did not disappear forever.

As the global economy restarted in stages, luxury goods demand recovered strongly.

There were multiple factors in the background.

Asset status of the wealthy.

Income that could not be used for travel and service consumption.

Large-scale economic measures by governments and central banks.

Rise in asset prices such as stocks and real estate.

Changes in consumption behavior.

And demand for high quality and rare goods that increased after the crisis.

The luxury market recovers at a speed beyond imagination.

CHANEL also grew significantly in this recovery phase.

—

"Small but strong" customers

What is important here is the customer structure of luxury companies.

In mass consumer goods, low-priced products are sold to a vast number of people.

In top-tier luxury, relatively limited customers have very large purchasing power.

Therefore, even if consumers around the world do not recover evenly, if demand from high-income and high-asset classes is strong, the market can recover significantly.

This structure became even clearer after the pandemic.

For CHANEL as well, the value of customers who have long-term relationships with the brand becomes more important than increasing the number of customers without limit.

—

Supply cannot be increased easily

When demand recovers rapidly, another problem occurs.

Supply.

CHANEL products are not things where production capacity can be doubled next month because demand has doubled like general industrial products.

Skilled craftsmen.

High-quality materials.

Strict quality control.

Workshops.

Production equipment.

Time is needed for these.

Therefore, a state of "demand recovery > expansion of supply capacity" can occur.

From here, the meaning of price and scarcity increases.

—

Inflation and costs

Furthermore, after the pandemic, global inflationary pressure strengthened.

Raw materials.

Transportation.

Energy.

Labor costs.

Logistics.

Exchange rates.

Various cost conditions surrounding companies change.

It is not unrelated to CHANEL, which maintains high quality, invests in craftsmen, and operates stores all over the world.

Price revisions have an aspect of responding to such cost increases.

However, CHANEL's price strategy in the 2020s cannot be explained only by inflation.

A larger brand strategy existed at the same time.

—

Redesigning scarcity

Demand is strong.

There are constraints on supply.

Brand value is also high.

One of the methods companies can choose under these conditions is raising prices.

If prices rise:

Demand can be suppressed to a certain extent.

Revenue per product unit can be increased.

The brand can be positioned in a higher price range.

Scarcity can be strengthened.

Here, CHANEL does not just return to the state before the pandemic, but advances to a higher price range.

The pandemic was a temporary crisis.

However, a long-term change occurred in CHANEL's market position after that.

—

Unit price, not quantity

In normal corporate growth, methods such as:

Increase sales volume.

Increase stores.

Increase customers.

become central.

However, in top-tier luxury, there is another growth method.

Do not increase sales volume significantly.

Increase the value per product.

Raise prices.

Deepen customer experience.

Increase scarcity.

In other words, it is "from Volume Growth to Value Growth".

CHANEL's price strategy after the pandemic became something that strongly indicates this direction.

—

Crisis shows the essence of the company

The pandemic was a stress test for companies.

What stops the business if it disappears?

What needs to be protected?

Which assets are really important?

In the case of CHANEL, what was seen through the crisis was a structure where these mutually support each other:

Brand.

Customer.

Craftsman.

Product.

Store.

Capital.

Organization.

Even if stores close temporarily, the brand remains.

Even if travelers disappear, there are local customers.

Even if shows change, creation continues.

If demand recovers, customers return to strong brands.

In other words, CHANEL was not a company that depends on a single sales channel.

—

Durability of private companies

And in this phase, CHANEL's ownership structure also has meaning.

By being private and having stable ownership by the Wertheimer family, there is no need to align management only with the short-term reactions of the stock market.

Even in a crisis, you can think about long-term investment in:

Human resources.

Craftsmen.

Stores.

Supply chain.

Brand.

The pandemic showed again the value of this financial leeway and long-term management ability.

—

Even if the world restarts, it did not return to normal

Eventually, stores restart.

Travel also returns.

Fashion shows also come to welcome audiences.
However, the world did not return completely to 2019.
Contact points with digital increased.

The importance of local customers increased.

Prices rose.

The regional composition of the luxury market also changed.

The safety of the supply chain became valued.

Interest in environmental problems also strengthened.

And companies experienced that global crises can happen again.

The pandemic was a temporary rupture, but it changed the management model after that.

—

2020 for CHANEL

If we position 2020 in CHANEL history, it is "the year the world stopped", and at the same time, it was also the year that reaffirmed where CHANEL's value exists.

Not just huge shows.

Not just traveler consumption.

Not just stores.

Not just one person named Lagerfeld.

History.

Brand codes.

Craft.

Customer.

Product.

Organization.

Capital.

They were united and supported CHANEL.

That is why it was able to pass through the crisis.

—

From crisis to price and scarcity

However, after overcoming the crisis, new problems begin.

Demand returns rapidly.

Supply cannot be increased easily.

Inflation progresses.

Global price differences become a problem.

Competition between top-tier brands also intensifies.

CHANEL repeatedly raises the prices of its main products and positions the brand in a higher price range.

There is a big question there.

If you raise prices, scarcity increases.

However, are price increases and value increases really the same?

For a long-term brand, the most important thing is not the price tag.

It is whether customers can continue to feel the creativity, quality, craft, service, history, and special experience commensurate with that price.

CHANEL after the pandemic advances exactly to this boundary.

In the next section, we will look at the management problems that symbolize CHANEL in the 2020s.

Section 5: Price and Scarcity

Why did CHANEL raise prices and advance to more exclusive luxury? And what kind of power and limits are there in the strategy of continuing to raise prices?

Section 5: Price and Scarcity

In luxury, price is not just an exchange condition.

Accumulate raw material costs, labor costs, logistics costs, store expenses, advertising expenses, and add a certain profit on top of that to decide the price—for general products, this way of thinking has great meaning.

However, for brands like CHANEL, price cannot be explained by that alone.

History.

Creativity.

Craftsmanship.

Scarcity.

Store experience.

Trust in the brand.

Social recognition.

Repair and after-sales service.

And owning that product as CHANEL itself.

These intangible values overlap with the price.

Therefore, the fact that CHANEL significantly raised the prices of its main products in the 2020s is not enough to see it just as a "price hike".

What was progressing there was also a redesign of where to place the brand called CHANEL in the global luxury market.

Price after the pandemic

Since 2020, CHANEL has implemented price revisions multiple times, mainly for its main handbags.

The background is not one.

Raw material prices.

Labor costs.

Logistics costs.

Exchange rate fluctuations.

Tax systems and price differences in each country.

Manufacturing capacity.

Investment in craftsmen.

Quality maintenance.

And global demand.

After the pandemic, while luxury demand centered on the wealthy recovered strongly, it was difficult to increase the supply capacity of products requiring advanced craft at the same speed.

Demand surges.

There are limits to supply.

Price increases occur there.

Economically, it is not unnatural.

However, in the case of CHANEL, that price revision was also linked to the long-term positioning of the brand.

—

Should you increase supply?

For normal products, if demand is strong, increase production volume.

Expand factories.

Add production lines.

Increase sales channels.

Sell even one more.

However, in luxury, you cannot use that method without limit.

Skilled craftsmen do not grow in the short term.

There are also limits to high-quality materials.

If you raise production speed too much, it puts a load on quality control.

What is more important is that the supply volume itself affects brand value.

If it becomes possible to purchase easily by anyone, anytime, anywhere, the specialness of the product may weaken.

Therefore, in top-tier luxury, the logic of general companies that "maximize supply because there is demand" is not necessarily optimal.

—

What is scarcity?

The word scarcity is easily understood as "reducing the number of products".

However, true scarcity is more complex.

Physical supply volume.

Craftsman technology.

Materials.

Places where you can purchase.

Price.

Access to customers.

Cultural evaluation of the brand.

These overlap and are established.

Even for products that only exist in 100 units, if no one wants them, scarcity value is not born.

Conversely, even if there is a certain amount of supply, if global demand far exceeds it, scarcity is formed.

In other words, scarcity in luxury is also "the difference between desire and access, not the lack of supply".

—

Price controls access

Price has the function of adjusting this difference.

Prices rise.

Customers who can purchase are limited.

Pressure on sales volume decreases.

The brand concentrates on higher income/asset classes.

Revenue per product increases.

Companies can reinvest that revenue into stores, craftsmen, materials, services, etc.

If you look only at this structure, there is rationality in price hikes.

Especially in situations where demand far exceeds supply capacity, price becomes an important means to adjust supply and demand.

However, there is an extremely important condition here.

The value felt by customers must also rise along with the price.

—

Price and Value are not the same

Suppose one product went from 1 million yen to 1.5 million yen.

The price on the tag rose by 50%.

However, that does not mean the value of the product automatically increased by 50%.

Customers ask.

How did the material change?

How did craftsmanship improve?

Is the design that attractive?

Has service improved?

Is scarcity real?

Has the brand become that much stronger culturally?

Can it be used for a long time?
Can it be repaired?

If there is no sufficient answer to this question, a state of "Price > Perceived Value" is born.

This is dangerous for long-term brands.

—

Price hikes use brand assets

The stronger the brand, the easier it is to raise prices.

Because customers trust the brand.

Over 100 years of history.

Gabrielle Chanel.

Lagerfeld.

N°5.

2.55.

Tweed.

Camellia.

Such accumulation supports current product prices.

In other words, the act of raising prices is, in a sense, also using brand assets accumulated in the past.

However, assets decrease if you misuse them.

Every time you raise prices, if the balance with creativity, quality, customer experience, and cultural appeal is not maintained, you may consume the trust accumulated over many years.

Therefore, price strategy is not just a problem for the finance department.

It is connected to creation itself.

—

CHANEL and Hermès

One of the reasons why CHANEL's price increase in the 2020s attracted attention is that some representative bags approached Hermès' price range.

However, the value formation models of both companies are not identical.

Hermès has its own structure, such as extremely limited production capacity, production by skilled craftsmen, very strong demand for specific bags, and the scarcity of the purchase opportunity itself.

CHANEL has CHANEL's structure.

Fashion.

Bags.

Fragrance.

Beauty.

Watches.

Fine jewelry.

And creation updated every season.

Therefore, if CHANEL only brings price closer to Hermès, it does not mean it becomes the same value system.

What is important is to strengthen CHANEL's unique price basis.

Creation and craft must be at its center.

—

"I want it because it's expensive" will not continue forever

In luxury, there is also an aspect where price itself creates appeal.

Cannot be purchased easily.

Owners are limited.

That creates social value.

However, there is a limit to scarcity based only on price.

Products that are only expensive may eventually be replaced.

Truly strong luxury has demand that says "I want it because it must be this" not just "I want it because it is expensive".

For that, uniqueness is necessary for the product itself.

—

Creativity and price

Here, price also relates to the evaluation of the Virginie Viard era.

If CHANEL's product prices rise, the level customers require for creation also rises.

Even if the price is nearly double, if the design looks like a mere repetition of the past, customer evaluation becomes strict.

Conversely, if new beauty, advanced craft, excellent materials, design that can be used for a long time, and special customer experience accompany it, the reason to support the price becomes stronger.

In other words, in luxury, you cannot separate Pricing Power and Creative Power for a long time.

Pricing power is born from past brand assets.

However, what maintains that power is current creation.

—

Growth without increasing product numbers

In CHANEL's price strategy, another form of corporate growth is also visible.

In general companies, quantity growth such as:

Sell 100.

↓

Sell 110.

↓

Sell 120.

becomes central.

In luxury, growth that increases value per product is also possible.

This is a method to increase corporate value without increasing sales volume infinitely.

Especially in craft production, there is rationality.

Do not demand unreasonable production increases from craftsmen.

Protect scarcity.

Maintain quality.

Increase added value per product.

This direction will also connect in the future with problems such as resource constraints and environmental impact.

—

Another scarcity called purchase restriction

Price is not the only way to create scarcity.

In some markets, it has been reported that certain restrictions are placed on the purchase quantity of popular products.

Its purpose can include not only demand management but also resale countermeasures and providing purchase opportunities to more regular customers.

What is important here is that the brand advances in a direction to manage not only "how much to sell for" but also "who to sell to, how much, and how".

This is quite different from normal retail.

General retail welcomes customers who purchase in large quantities.

In luxury, excessive purchase and resale may damage the brand's customer structure.

—

The problem called the resale market

There is an active second-hand market for CHANEL bags.

This has two meanings for the brand.

On one hand, it shows that the product has long-term residual value.

There is demand even for old bags.

There is also a market for vintage.

This can be strong evidence showing the product's durability and brand value.

However, on the other hand, it can also create purchases for short-term resale purposes.

Purchase new.

Immediately put it on the second-hand market.

Gain profit from the price difference.

When this happens, a market different from the relationship with long-term customers that the brand desires is formed.

Therefore, for CHANEL, the second-hand market is a proof of value and at the same time a management challenge.
—
Scarcity and customer selection

When prices rise, purchase opportunities are limited, and store experience becomes advanced, the customer structure also changes.

From a model where anyone enters the store in the same way and accesses the same products, to a model that values customers with deeper relationships.

For important customers, these may be provided:

Advance introduction of products.

Individual customer service.

Special space.

Events.

Deeper product knowledge.

Here, the store approaches from a mere sales place to a "Client Relationship Platform".

—

Is it okay to become a brand only for VIPs?

However, there is a limit here too.

Luxury brands need to be scarce.

At the same time, they need to be longed for by the next generation of customers.

If you close only to current most important customers, the brand's cultural spread may be lost.

Young people know N°5.

Enter CHANEL from beauty.

Watch fashion shows.

Want to buy a bag someday.

Such long customer formation is also important.

Therefore, CHANEL needs both "deepening current high-value customers" and "leaving an entrance to the brand for future customers".

—

An open entrance called Fragrance & Beauty

In this respect, CHANEL's multiple business structure is important.

Even if the highest price range of Fashion becomes more exclusive, Fragrance & Beauty has relatively wide customer contact points.

Perfume.

Lipstick.

Skincare.

Through them, more people can experience the brand called CHANEL.

In other words, CHANEL as a whole can have a hierarchical structure where:

The upper layer increases scarcity.

On the other hand, the first contact point with the brand is maintained relatively widely.

This is a great strength as a luxury company.

—

How to manage global prices

Global brands also have the problem of regional prices.

Exchange rates change.

Tax rates are different.

Tariffs are different.

Then, even for the same product, large price differences may be born between Paris, Tokyo, New York, etc.

If price differences widen, customers purchase in cheaper countries.

Travel demand follows price differences.

Resellers also move.

Therefore, CHANEL has taken the direction of managing price differences between major markets for many years.

There is a way of thinking of brand management that "wherever you buy in the world, CHANEL belongs to the same value system".

It does not mean complete identical prices.

However, suppressing excessive regional differences becomes important in maintaining a global brand position.

—

Limits of price hikes

Pricing power is evidence of a strong company.

However, it is not infinite.

Customers have choices.

Hermès.

Dior.

Louis Vuitton.

Bottega Veneta.

Celine.

Other luxury brands.

There are also choices to use funds for travel, art, real estate, etc., instead of products.

Therefore, the higher the price rises, the stronger the question of "why CHANEL?" becomes.

Price itself cannot answer this question.

What answers it are:

Creation.

Craft.

History.

Customer experience.

And the product itself.

—

Scarcity is born from relationships

The strongest scarcity is not just that things are few.

Not something anyone can create.

Not something anyone can produce the same quality.

Not something anyone can have 100 years of history.

Cannot build the same craftsman network in the short term.

Cannot build the same relationship with customers immediately.

In other words, true scarcity is born from "scarcity of Capability, not lack of Quantity".

For CHANEL, craftsmen, ateliers, materials, archives, brand codes, and trust with customers all support this capability-based scarcity.
—
Returning from price to value
CHANEL in the first half of the 2020s showed strong pricing power to the world.
However, that itself is not the final goal.

Price is a result.

The value that enables that price is more important.

If one bag becomes very expensive:
Can be used for a long time.
Can be repaired.

Beautiful even after many years.

Recognized across eras.

In some cases, can be passed on to the next owner.

If you can extend the time of value that far, the meaning of price also changes.

Because it can be evaluated as "long-term use value" not just high price at the time of purchase.

—

From scarcity to long-term value

Here, CHANEL's price strategy connects to the important subject of the latter half of this book.

Do you judge CHANEL's value by looking only at the new product price?

Or do you think about it including:

Materials.

Craft.

Durability.

Repair.

Attachment.

Brand history.

Second-hand market.

Next owner.

If the latter, luxury value does not exist only at the time of sale.

It is also formed during the time the product spends with humans.

—

Price is a boundary line

After all, price has multiple functions.

Generates revenue.

Adjusts demand.

Increases scarcity.

Shows brand position.

Selects customers.

Creates source of long-term investment.

However, at the same time, price also becomes a boundary of the relationship with customers.

If you raise prices, fewer people can enter the inside of CHANEL.

That is exactly why a stronger responsibility is born for companies that continue to raise prices.

If you demand a high price, you must continuously create high value.

—

The point where CHANEL is tested

After the pandemic, CHANEL advanced to higher luxury against the backdrop of strong demand and pricing power.

However, new challenges were also born due to that.

The higher the price rises, the higher the expectation for creation.

The higher the scarcity, the higher the uniqueness required for one product.

The demand to see a new CHANEL, not just existing codes, also strengthens.

In other words, the success of the price strategy itself requires the next creative update.

There is important background leading to the transformation of 2024.

In the Virginie Viard era, CHANEL was succeeded, the company grew significantly, and the price range rose.

However, if the brand advanced to a higher position, the next creation worthy of that position is also necessary.

In June 2024, Viard resigns.

CHANEL will choose the next creator again.

What we see in the next section is that boundary.

Section 6: The Transformation of 2024

Why did CHANEL, which was protected by succession, need "update" once again?

Section 6: The Transformation of 2024

2024 became another boundary for CHANEL.

In 2019, Karl Lagerfeld passed away.

After that, Virginie Viard took charge of creation in the fashion division for about 5 years, and CHANEL passed through the global crisis called the pandemic. During that time, the company scale expanded, the brand's price range rose, and investment in craftsmen, stores, and supply chains continued.

CHANEL as a company had not become weak.

Rather, it had become one of the world's largest luxury maisons with extremely strong management strength.

Even so, in June 2024, Viard leaves CHANEL.

What this event showed was the fact that being strong in management and not needing creative update are not the same.

End of the succession period

To understand Viard's approximately 5 years, it is necessary to remember its starting point.

2019.

The huge era of about 36 years called Lagerfeld suddenly ended.

What CHANEL needed at this time was not a sudden revolution.

Not stopping creation.

Connecting the atelier.

Maintaining brand codes.

Giving continuity to customers.

Not making the huge brand unstable.

Viard fulfilled that role.

But succession has a point of ending.

Because if succession continues too long, the question eventually changes.

From "how to connect after Lagerfeld" to "what will CHANEL create anew from now on".

2024 was the year that question came to the front.

—

The company was growing

This transformation cannot be explained only by business deterioration.

CHANEL grew significantly in the first half of the 2020s.

Recovered from the slump due to the pandemic, and in 2023, sales reached a scale close to 20 billion dollars.

Not just Fashion.

Fragrance & Beauty.

Watches & Fine Jewelry.

Boutiques all over the world.

Huge brand assets.

CHANEL's corporate foundation itself was very strong.

Therefore, the transformation of 2024 is not a simple structure of "changing designers because the company is in crisis".

Rather, it is more important to see it as "because corporate value became large, a higher level was required for the creativity that supports that corporate value".

—

If prices rise, requirements for creation also rise

As seen in the previous section, in the first half of the 2020s, prices rose significantly at CHANEL, centered on representative products.

There is rationality in the price increase itself.

Inflation.

Labor costs.

Materials.

Logistics.

Exchange rates.

Investment in quality.

Scarcity.

Global price system.

However, in luxury, price increases have another effect.

They also raise customer expectations.

Bags that became more expensive.

Clothes that became more expensive.

Jewelry that became more expensive.

Then, questions are born such as:

Shouldn't it be more special?

Shouldn't it be more beautiful?

Shouldn't it be newer?

Shouldn't it be usable for longer?

In other words, price increases are accompanied by a rise in Creative Expectation.

—

You cannot support prices forever with brand assets alone

CHANEL has a powerful history.

Gabrielle Chanel.

N°5.

2.55.

Tweed.

Camellia.

Lagerfeld.

This brand asset is extremely large.

However, you cannot continue to use that history as a basis for price increases forever.

You can put past value on current products.

But if current products do not create new value, eventually you will only consume past assets.

Long-lived brands need both "using Heritage and increasing Heritage".

In 2024, CHANEL was required again to have creation that produces the next Heritage.

—

The market also begins to change

From 2021 to 2023, the global luxury market experienced a strong recovery.

However, that growth does not continue at the same speed forever.

Interest rates.

Inflation.

China's economy.

Real estate market.

Geopolitics.

Wealthy consumption.

Exchange rates.

Travel.

Various conditions change.

In 2024, vigilance against growth slowdown strengthens in the entire luxury market.

In phases where demand expands unconditionally, it is easy to obtain corporate growth through price increases and store expansion.

However, if the market enters a selection phase, customers ask more strictly.

Why this brand?

Why this product?

Why this price?

Here, creativity becomes important again.

—

Expansion alone will not be enough

CHANEL since 1983 had a time of very strong expansion.

Rejuvenate the brand.

Spread to the world.

Increase stores.

Increase customers.

Develop product categories.

Make shows huge.

Raise price ranges.

This was an extremely powerful growth model.

However, when the company scale becomes sufficiently large, you cannot continue the same direction infinitely.

Continue to increase stores.

Continue to raise prices.

Continue to increase awareness.

Continue to increase supply.

A limit comes somewhere.

There, the company moves to the next question.

Not how big you become, but how deeply you can create value.

In CHANEL in 2024, we can see signs of this transformation.

—

Creative blank

After Viard's resignation, CHANEL did not immediately announce the next Artistic Director.

There is meaning here too.

Choosing the creative head of the world's top brand is not just hiring.

How famous is the candidate?

Can they make clothes that sell?

That alone is not enough.

Can they read archives of over 100 years?

Can they understand craft?

Can they understand CHANEL's view of the body?

Can they use brand codes without copying?

Can they reach the new generation?

Can they collaborate with huge companies?

You must think about all of that.

The person chosen changes CHANEL not for a few years, but in some cases for the next few decades.

—

Should you choose a star designer?

In modern luxury, the change of creative directors becomes big news.

If you recruit a famous designer, you can gather momentary attention.

However, for a brand with as strong a history as CHANEL, choosing only by name recognition is dangerous.

If you bring in intense self-expression from the outside, it may collide with CHANEL's codes.

Conversely, if you choose a person who is too loyal to CHANEL, the next update will not happen.

What is needed is a person who has both Respect and Independence at the same time.

Respect history.

But not be ruled by history.

—

At that time, another time was moving on the management side
Do not look at the transformation of 2024 only from the designer.

At CHANEL, important changes had already occurred on the management side since 2022.

Leena Nair has taken office as global CEO.

This was also an exceptional choice in CHANEL's history.

Not from inside the luxury industry.

She is a person who has experienced global management centered on human resources at Unilever.

In other words, as of 2024:

Management had already been updated.

It was necessary to connect the update of Creation to that.

—

Two different expertises

CEO and Artistic Director do not do the same job.

CEO looks at:

Organization.

Human resources.

Finance.

Stores.

Investment.

Supply chain.

Regional market.

Environment.

Long-term management.

Artistic Director looks at:

Clothes.

Body.

Materials.

Silhouette.

History.

Codes.

Beauty.

Culture.

However, in one company called CHANEL, both are finally connected.

Even if you create wonderful clothes, you must be able to manufacture them as a company.

Even if you make huge investments, if creation is weak, brand value cannot be maintained.

Therefore, at CHANEL after 2024, how to integrate the update of management and the update of creation became a new challenge.

—

Why was it Matthieu Blazy?

In December 2024, CHANEL announced that it would appoint Matthieu Blazy as the Artistic Director of the fashion division.

In this choice, there is a clue to read CHANEL's next direction.

Blazy has not been evaluated as a type of creator who moves brands simply by strong logos or large-scale marketing.

Look at clothes.

Look at materials.

Look at structure.

Look at craftsmanship.

Create things that look simple at first glance with extremely advanced technology.

Instead of denying the past and making the brand something else, update existing assets to a new state while reading them.

Such abilities have high affinity with CHANEL.

—

Not returning to Craft

Here, if you express it only as "return to craft", it is insufficient.

CHANEL has never discarded craft in the first place.

Métiers d'art.

Atelier.

le19M.

Advanced craftsman technology has been at the center of the company for many years.

The problem is not whether craft exists.

How much new creation can be born from craft.

If you only show craftsman technology as traditional preservation, it becomes a museum.

If a new designer issues new requirements to that technology, craft becomes a future expression.

Blazy's appointment increased that possibility.

—

Do not reverse-calculate clothes from marketing

Modern huge fashion companies have a lot of data.

What sold.

Which color sold.

What is popular in which region.

Which customer bought what.

What was reacted to on SNS.

With the development of AI, this analysis ability increases further.

It is useful for corporate management.

However, if you completely decide the next product from past sales data, it is difficult for new things to be born.

Data teaches basically "what has already happened".

Creation requires judgment different from that.

Things that have never sold before.

Things customers have never seen before.

But things you want the moment you see them.

Creating that is creation.

—

Because it is the AI era, human judgment is questioned

This becomes even more important after 2026.

Generative AI can create images.

Can write text.

Can classify past products.

Can analyze customer data.

Demand forecasting also becomes advanced.

It also becomes technically possible to analyze CHANEL's huge archives.

However, if you completely entrust the judgment of:

Which is beautiful.

What should be created now.

What to leave, what to change.

How far to change so it is no longer CHANEL.

to data, there is a danger that the brand will approach the statistical average of the past.

Therefore, what is needed for CHANEL in the AI era is not a choice of human or AI.

It is to leave human senses, body, experience, and judgment at the center of final creation while increasing analysis ability through AI.

—

Update also progresses on the management side

In parallel with this change in creation, management time is also moving at CHANEL.

Leena Nair, who became CEO in 2022, was not a manager chosen from inside the luxury industry.

She is a person who has accumulated experience centered on human resources and organization at Unilever.

This is symbolic.

It shows that the management ability CHANEL needed in the next era was not just technology to sell products in larger quantities.

Human resources.

Organization.

Culture.

Diversity.

Craftsmen.

Store staff.

Customers.

Supply chain.

Society.

The ability to build various human relationships that constitute the company long-term becomes important.

—

Engineering and Creation

Nair has a background in studying engineering.

Blazy creates from clothes and craft.

The expert areas of the two are completely different.

However, when looking from the perspective of a company, an interesting complementary relationship is established.

On the management side:

Design complex organizations.

Place human resources.

Invest.

Build supply chains.

Measure environmental impact.

Move the company long-term.

On the creation side:

Read history.

Read materials.

Look at the body.

Dialogue with craftsmen.

Change to clothes.

Present as beauty.

One designs the company.

The other updates the brand.

Engineering and Creation are connected inside the same CHANEL.

—

CHANEL as a female company

Here too, it is necessary to return to Gabrielle Chanel.

CHANEL is a company born from a female founder.

Moreover, what she changed is not just the shape of women's clothes.

It was the problem of how women use their bodies and live in society.

More than 100 years later, CHANEL is led by a female CEO.

However, if you evaluate this fact only by numbers such as "a female CEO was born" or "the female ratio is high", you narrow the essence.

What is important is "what kind of company can participate in decision-making?".

There are people with different experiences.

There are people with different cultural backgrounds.

There are craftsmen.

There are sales staff.

There are managers.

There are designers.

There are customers.

How can those knowledges be connected to the company's decision-making?

The corporate value of diversity lies not in the number of people itself, but in expanding the range of perspectives and knowledge that the company can use.

—

The world market also changes

CHANEL is not a brand only for Europe.

USA.

Japan.

China.

Korea.

Middle East.

Southeast Asia.

India.

Other markets.

If the distribution of global wealth changes, the luxury market also changes.

Here too, simple store expansion is not enough.

Culture is different.

Body view is different.

Aesthetic sense is different.

Customer behavior is different.

While understanding each region, it must still be consistent as CHANEL.

In the next stage of globalization, the ability to "build relationships as one brand while keeping differences" is important, not the ability to make the world the same.

—

The relationship with the Earth also changes

Furthermore, companies in the 2020s have become difficult to treat the natural environment as an external condition.

Fashion depends on natural capital.

Fiber.

Leather.

Metal.

Water.

Land.

Energy.

Transportation.

Stores.

Packaging.

Everything is connected to the global environment.

If you want to secure high-quality materials long-term, the production environment itself must be sustainable.

Even if you leave craftsman technology for 100 years ahead, if materials are lost, products cannot be made.

Therefore, environmental policy is not just social contribution for brand image, but "management that protects conditions to manufacture future CHANEL".

—

Value of using for a long time

Here, another possibility becomes visible in CHANEL's craft.

Create high-quality products.

Use for a long time.

Repair.

Maintain.

Relationship with the owner deepens.

In some cases, pass to the next generation.

Meet a new owner in the second-hand market.

At this time, the value of the product does not exist only at the moment of sale.

It changes over time.

Sometimes it gets scratched.

Sometimes it is repaired.

Memories are added.

The owner changes.

And it is used again.

In normal product economies, time is easily treated as depreciation.

However, in excellent craft, time sometimes participates in value formation.

—

The next CHANEL does not create only new products

This is important in thinking about future luxury.

There is no need to think of the company's work as:

Manufacturing

→ Sale

→ End

Manufacture.

Sell.

Used.

Repair.

Used again.

In some cases, move to another owner.

Thus, extend the life of the product.

You can design the whole thing as corporate value.

Craftsmanship can be evaluated not just as luxury at the time of purchase, but as "ability to withstand time".

—

Beauty cannot be measured by numbers alone

In corporate management, many things are quantified.

Sales.

Profit.

Price.

Sales volume.

Number of stores.

Number of customers.

Market share.

Carbon emissions.

Number of employees.

However, at the center of CHANEL, something that cannot be decided by numbers alone remains until the end.

It is beauty.

Why is a certain jacket beautiful?

Why do you want to hold a certain bag even 20 years later?

Why is one perfume remembered for over 100 years?

It cannot be a perfect mathematical formula.

That is why luxury companies are special.

They must be managed rationally.

However, they cannot exist by rationality alone.

—

What is the next creation?

Integrating up to here, CHANEL's next creation is no longer just "creating new clothes".

Human.

Body.

Craft.

History.

Customer.

Organization.

Technology.

Environment.

Capital.

And beauty.

Connect these inside one company and express them as new products every year.

That is the job imposed on modern CHANEL.

—

2022, 2024, 2025

If you line up the times here, one flow is visible.

2022.

Leena Nair takes office as CEO.

A new time of management and organization begins.

2024.

Virginie Viard resigns, and in December, the appointment of Matthieu Blazy is announced.

A boundary from succession to update appears.

2025.

Blazy starts actual creation at CHANEL, and that work is expressed as a collection.

Two times, update of management and update of creation, begin to overlap inside the same company.

And beyond that, there is a longer corporate time including environment, supply chain, materials, customers, and AI.

—

Creation is connecting the past and the future

Gabrielle Chanel created new clothes from the body and life of women at that time.

Lagerfeld re-read those codes for the world after the 1980s.

Viard carried the huge legacy without rupturing it until the next era.

And Blazy re-reads it again.

Looking at this history, CHANEL has one characteristic.

It has not continued for over 100 years because it preserves the same thing.

It continues because it has translated the same thing into different eras many times.

Succession alone makes the brand the past.

Renewal alone makes the brand something else.

What is needed is "updating while succeeding".

There is creation of long-lived brands.

—

End of Chapter 4

The "After Lagerfeld" that started in 2019 was not just a successor problem.

There, multiple changes overlapped:

Death of creator.

Succession by Viard.

Pandemic.

Market recovery.

Price increase.

Strengthening of scarcity.

CEO change.

And appointment of Blazy.

In that process, CHANEL did not lose the past, but did not return to the past, and started to advance to the next creation.

But creation alone cannot explain this company.

Behind what enables such long-term updates, an extremely special corporate structure exists.

CHANEL is a huge company but is not listed.

It is a global brand but does not belong to a huge conglomerate.

And at the center of its ownership, one family has been there for a long time.

In the next Part III, we will look at another CHANEL behind the glamorous fashion shows.

Who owns CHANEL, and who has enabled long-term decision-making?
From there, we enter the structure of the company that has supported creation for over 100 years.

Part III: Company
- Management structure supporting CHANEL

With love and respect, mandala