How CHANEL can address opportunities and challenges presented by operating in store and online

Since the beginning of the digital era, luxury brands like Chanel have been faced with the dilemma of how they adapt their high end store experiences to the digital realm. After all, should Chanel offer the convenient services pioneered by mass market brands like Boohoo and loose their exclusivity? Or should they keep their exclusivity but loose out on entire generation who grew up with the world at their finger tips?

When dissecting this dilemma, it’s important to make clear that unlike games, music and film, fashion cannot be digitalised. This means that luxury brands like Chanel won’t have to deal with the threat that the digital revolution had on the likes of Blockbusters, as in the case of fashion, the physical experience will always play a part in a customers shopping experience. However, that doesn’t mean that Chanel is exempt in trying to find ways of creating synergy between their boutiques and their own online experience. 

Despite this clear need for an omnichannel experience, PwC (2018) discovered that the more exclusive the brand is, the fewer key omnichannel services they deliver to their customer. However, unlike other ultra high end brands like Hermes, Chanel doesn’t allow customers to purchase their boutique products (ready to wear, bags, accessories etc.) online.

Instead customers can only get access to their non exclusive products such as make up, skin care and sunglasses, which can easily be found on the high street.

One of the key reasons Chanel has been reluctant to invest digitally is due to the luxury brand belief that customers would not want to shop for heavy ticket items online. However, this concept is being to be turned on its head with digital pure-play luxury sites like Farfetch and Yoox-Net-a-Porter Group disrupting the luxury landscape. 

As a result, almost 25% of luxury sales take place online, which would have been unheard of a decade ago. Furthermore, it is also impossible to ignore the impact that the digital experience has on a customers shopping journey, as it is a vital part of their decision making process as 71% use their phones for online research. As a result, todays shopper goes online to discover, be inspired and learn about what they want to buy and then visit the see to see, touch and try it on before purchasing the item. 

Although, it’s clear that Chanel should become more omnichannel, that doesn’t mean that Chanel should undertake the same strategies as mass market or even premium brands. Instead, for Chanel, omnichannel must be a tactical, rather than strategic decision. Although omnichannel can provide Chanel with the scale and reach to a broader audience, it might also have detrimental effect on Chanel’s sales as their products may then lose their allure as their perceived exclusivity begins to diminish. 

Thus, to meet the needs of their high end consumer, Chanel must firstly, deliver a personalised and unique experience to its customers, for example, Mr. Porter gives its customers an exclusive feel by changing the it’s logo from “Mr. Porter” to that of the customers name e.g. “Mr. Moore", which not only grabs their attention, but also makes them feel special and elite, the exact feeling a customer wants from a luxury brand. 

Chanel could go one step further and follow in Tod’s footsteps (who allow customers to digitally create their own Gommino driving shoe), something that Chanel could bring to their iconic flap handbags. 

This custom made service could be available in all Chanel boutiques, where their specialised staff can help the customer to create their very own iconic flap bag.

Secondly, Chanel should continue to segment their product but soften it so that only their truly iconic items like their flap bag are only available in boutiques. A great example of this Audemars Piguet, who have special boutique colours of their Royal Oak watches, that customers can only purchase from an official Audemars Piguet boutique. This creates major hype for the items and as a result, these pieces have waiting lists of up to 5 years just to be able to purchase them. 

Thus, not only keeping the exclusivity of the brand but actually enhancing the hype of certain products.

Thirdly, Chanel should look to digitalise the store to develop brand experience offline. Currently Chanel have created a strategic partnership with Farfetch, to build on Farfetch’s “store of the future” and apply this research to Chanel boutiques. Although the details of the agreement are currently unclear, areas that Chanel could invest in could be: RFID enabled clothes rails that discovers the items they are browsing and saves the subsequent items to a wish list so that all the items are in one place to make the purchase easier, store auto-detection so that as soon as VIP customer walks into a Chanel boutique someone is on hand to greet them immediately just to name a few possibilities.

REFERENCES

https://www.mrporter.com/en-gb/

https://www.chanel.com/en_GB/fashion/products/handbags/classic-handbag.html

http://www.theparisianeye.com/2012/07/chanel-open-fine-jewelry-store-in-monaco.html

https://www.tods.com/gb-en/mygommino.html

https://luxe.digital/digital-luxury-reports/high-end-multibrand-stores-dominate-online-luxury-retail/

https://www.upwardhome.com/497/

http://essentialhome.eu/inspirations/lifestyle/fashion-luxurious-brands-2016/

https://www.watchclub.com/audemars-piguet/royal-oak/boutique-exclusive-blue-dial-ref-15400stoo1220st03-year-2017

https://fashionista.com/2018/02/kaia-gerber-chanel-handbag-spring-2018-ad-campaign

https://www.strategyand.pwc.com/media/file/The-Luxury-Omnichannel-dilemma.pdf