The luxury fashion industry is facing a critical challenge: how to navigate the delicate balance between exclusivity and accessibility. With the recent commercial releases from Chanel and Dior, two iconic brands are taking center stage in addressing this issue.
The High-Stakes Game of Luxury Pricing
After a post-pandemic boom, the luxury sector has been grappling with a two-year slump, and pricing has emerged as a pivotal concern. French powerhouses Dior and Chanel, known for their creative reboots, have led the industry in price increases, far surpassing the long-term average.
Between 2020 and 2023, Chanel and Dior raised prices by a staggering 59% and 51%, respectively, on select key products. This aggressive pricing strategy has had a significant impact, resulting in over 50 million shoppers exiting the market between 2022 and 2025, according to Bain.
But here's where it gets controversial: Chanel's sales took a hit in 2024, experiencing its first drop since 2020, while Dior's performance lagged behind its stablemate, Louis Vuitton. Both brands are part of LVMH's fashion and leather goods division, which has suffered two consecutive years of declining sales, down 5% last year.
The Quest for Growth: Volume vs. Pricing Power
Analysts predict that luxury growth in the coming year will be driven by volume. Brands are left with few options, having eroded their pricing power through years of 'greedflation,' where price hikes accounted for a significant portion of sales growth.
Leather goods, traditionally the industry's growth driver, have lost steam during the recent slump. However, they are now seen as crucial for bringing back sales growth.
The Handbag Charm Offensive: A Strategy for Winning Back Shoppers
While Chanel and Dior are not lowering the entry cost for handbags, both brands are expanding their leather goods selection at the lower end. Dior has increased the proportion of leather goods priced below €4,000 to 87% of its overall offer, compared to 69% three years ago. Chanel, on the other hand, has seen a surge in leather goods priced below €4,000, now accounting for nearly a third of its overall selection.
Chanel emphasizes its wide range, stating, "Chanel offers a diverse selection so that every customer can find a suitable bag."
Both brands are also focusing on lower-priced handbags, with Dior introducing the Bow Bag and Trianon, priced at €3,700, and Chanel's Spring/Summer 2026 pre-collection featuring more purses under €5,000.
Dior's new Spring/Summer 2026 collection showcases a growing assortment of items under €1,000, with an increase in small accessories like wristlets and card holders. These products, including bag charms, brooches, ballet flats, scarves, and sneakers, serve as a gateway for shoppers to engage with the brand before committing to the expensive handbag category.
"You can think of the entry items as a holistic layer," says Claudia D'Arpizio, luxury lead at Bain. "You need a compelling offer below a certain psychological threshold that doesn't require a significant investment."
As these fashion houses refresh their lower-priced offerings, they are also ensuring that these new products are prominently featured. Dior, for example, is partnering with influencers like Christie Tyler, Tina Leung, and Aimee Song to promote its new J'Adior ballet flat, priced at €890.
The more entry-focused strategy is evident not only in commercial rollouts but also in the styling choices on both designers' runway debuts in October.
"It's a bit more commercial," says Jessica Ramirez, founder of The Consumer Collective. "There are entry statements like smaller bags, bag charms, accessories, jewelry, socks, and hats that can be layered."
Brands are pulling all the levers they can, adjusting products, prices, and teams, including designers. However, external factors like rising costs and lower consumer confidence may impact their efforts.
"Aspirational customers may not be unwilling to buy, but rather unable to buy," Nick Anderson, Berenberg analyst, points out.
As the luxury industry navigates this complex pricing problem, the strategies employed by Chanel and Dior will be closely watched. The question remains: Can they successfully balance exclusivity and accessibility without compromising their brand identity? The debate is open, and we invite you to share your thoughts in the comments.
