Chanel’s Magnificence Enterprise May Be Majority DTC ‘Inside A Few Years’

Chanel’s magnificence and perfume enterprise, which has traditionally been dominated by wholesale, may turn out to be majority direct-to-consumer inside a couple of years because the French luxurious big invests in e-commerce and rolls out extra standalone cosmetics boutiques, chief monetary officer Philippe Blondiaux mentioned.

Chanel reported 2021 gross sales that surged 50 % to $15.6 billion as excessive demand for its style, watches and jewelry drove a pointy rebound from the pandemic. Fragrance and sweetness gross sales have been extra muted because the class continued to undergo from the decline in journey retail, which made up as a lot 20 % of the unit’s gross sales in 2019.

Nonetheless, the division—whose objects embrace Chanel No. 5 fragrance, Hydra Magnificence cremes, and Les Beiges blush sticks—reported progress on a transition to direct channels that might see it steadily scale back its historic reliance on wholesale companions.

E-commerce gross sales jumped 32 % for Chanel’s magnificence and perfume merchandise, Blondiaux informed BoF in an interview. Chanel additionally opened greater than 50 standalone magnificence boutiques final 12 months.

“The path is towards extra of a direct-to-consumer enterprise,” Blondiaux mentioned. “[DTC] may characterize the vast majority of our magnificence enterprise inside a couple of years, although it is determined by the area.”

Whereas wholesalers like Sephora and Marrionaud stay very related in Europe, the share of wholesale within the US has fallen considerably, Blondiaux mentioned. That’s could possibly be because of the prevalence of e-commerce within the US market, in addition to the decline of American malls.

DTC fashions have discovered favour with traders in recent times as they will result in greater margins, higher shopper knowledge, extra frequent relationships with shoppers, and—key for the posh trade—stricter management over pricing.

Whereas Chanel’s transition to direct-to-consumer is gathering tempo, the corporate doesn’t see the mannequin as an finish in itself.

“What we’re aiming for is to have an omnichannel enterprise,” Blondiaux mentioned. “It’s about ensuring that at every touchpoint, at every a part of the buyer journey we are able to decide what purchasers are in search of. We wish every channel to have its personal identification, its personal goals, and to take part in a world omnichannel technique.”