Chanel: Future-Proofing the Business Model

This case examines Chanel’s evolution from its founding by Gabrielle ‘Coco’ Chanel to a global luxury megabrand. It explores the company’s distinctive strategy – from its vertically integrated supply chain to its refusal to espouse e-commerce, menswear or creative collaborations – while maintaining an unwavering focus on desirability. During Karl Lagerfeld’s four-decade tenure as creative director, Chanel perfected its business model, in which high-end couture drove up consumer willingness to pay and translated into sales of high-margin, high-volume accessories and beauty products.The 2020 Covid-19 pandemic tested Chanel’s resilience. It navigated it through a spate of price increases and intensified marketing. With the appointment of Leena Nair as CEO in 2022, the company embarked on a modernisation effort emphasising diversity, inclusion and social sustainability. But as the post-pandemic luxury consumption boom ended, Chanel faced a complex transition, raising key questions. To what extent could it continue to sustain growth by increasing prices? Where could it find the next whitespace opportunity? Should it rethink its digital and omnichannel approach? And how could it adapt its culture to remain relevant to both customers and employees in the years ahead?