A slowdown in the key Chinese market is currently hurting the luxury brand’s performance, but Chanel executives warned on Monday that the company faces even greater risks from oversaturation and “luxury fatigue.”
Frédéric Grangey, head of watches and jewelery at Chanel, told Swiss daily Le Temps that 2025 and 2026 will be “complicated” for the luxury goods industry.
After three years of strong growth, the industry is currently being hit by a decline in demand from China due to the country’s real estate crisis and high youth unemployment.
Luxury goods industry leader LVMH’s sales fell 4.4% in the third quarter, mainly due to China, while Gucci owner Kering’s sales fell 15%.
Grangey said China has been the driving force behind the growth of the luxury goods industry in recent years, and some luxury goods companies have become overly dependent on China.
But he noted that “there is a third factor that is more worrying and explains why this crisis is likely to last longer”, calling this a kind of “luxury fatigue”. is.
“There’s a feeling that’s hitting mature markets where customers are starting to question what’s the point of this industry,” Grangey told Le Temps.
Although the luxury goods industry is used to weathering the rough waters of the global economy, “this crisis will have a severe impact on our business,” as “our customers are tired of being overwhelmed by luxury goods.” Deaf,” he said.
“2025 and 2026 are going to be complex years” for the luxury goods industry, Grangey said.
But being a privately held family company allows Chanel to “see the crisis from a different perspective” and take a long-term view, he said.
He added that as such crises become more frequent in the industry, taking a long-term view will become increasingly important.
What’s more, the luxury brand, founded in 1910 by Gabrielle “Coco” Chanel, hasn’t expanded directly into China, with a much smaller footprint and only 16 boutiques there, Grangey said. Ta.
