Chanel (Brand Audit)

Chanel S.A. is a French privately held company owned by Alain Wertheimer and Gérard
Wertheimer, grandsons of Pierre Wertheimer, who was an early business partner of
the couturière Coco Chanel. Chanel S.A. is a high fashion house that specializes in haute
couture and ready-to-wear clothes, luxury goods, and fashion accessories.

History
The Coco Chanel era
Establishment and recognition — 1909–1920s
The House of Chanel (Chanel S.A.) originated in 1909 when Gabrielle Chanel opened
a millinery shop at 160 Boulevard Malesherbes, the ground floor of the Parisian flat of
the socialite and textile businessman Étienne Balsan, of whom she was the mistress. Because
the Balsan flat also was a salon for the French hunting and sporting élite, Chanel had the
opportunity to meet their demi-mondaine mistresses, who, as such, were women of fashion,
upon whom the rich men displayed their wealth — as ornate clothes, jewelry, and hats.
Coco Chanel thus could sell to them the hats she designed and made; she thus earned a
living, independent of her financial sponsor, the socialite Balsan. In the course of those
salons Coco Chanel befriended Arthur 'Boy' Capel, an English socialite and polo
player friend of Étienne Balsan; per the upper class social custom, Chanel also became
mistress to Boy Capel. Despite that social circumstance, Boy Capel perceived the
businesswoman innate to Coco Chanel, and, in 1910, financed her first independent
millinery shop, Chanel Modes, at 21 rue Cambon, Paris. Because that locale already housed
a dress shop, the business-lease limited Chanel to selling only millinery products,
not couture. Two years later, in 1913, the Deauville and Biarritz couture shops of Coco
Chanel offered for sale prêt-à-porter sports clothes for women, the practical designs of which
allowed the wearer to play sport.
The First World War (1914–18) affected European fashion through scarcity of materials,
and the mobilization of women. By that time, Chanel had opened a large dress shop at 31
rue Cambon, near the Hôtel Ritz, in Paris.
Coco Chanel used jersey cloth because of its physical properties as a garment and how well it
adapted to a simple garment-design. Sartorially, some of Chanel's designs derived from the
military uniforms made prevalent by the War; and, by 1915, the designs and the clothes
produced by the House of Chanel were known throughout France.
After the First World War, the House of Chanel, following the fashion trends of the 1920s,
produced beaded dresses, made especially popular by the Flapper woman. By 1920, Chanel
had designed and presented a woman's suit of clothes — composed either of two garments or
of three garments — which allowed a woman to have a modern, feminine appearance, whilst
being comfortable and practical to maintain; advocated as the "new uniform for afternoon
and evening", it became known as the Chanel Suit.
In 1921, to complement the suit of clothes, Coco Chanel commissioned the perfumer Ernest
Beaux to create a perfume for the House of Chanel. His perfumes included
the perfume No.5, named after the number of the sample Chanel liked best. Originally, a
bottle of No. 5 de Chanel was a gift to clients of Chanel. The popularity of the perfume
prompted the House of Chanel to offer it for retail sale in 1922.
In 1923, to explain the success of her clothes, Coco Chanel told Harper's Bazaar magazine
that design "simplicity is the keynote of all true elegance."
Business partners — late 1920s
The success of the No. 5 encouraged Coco Chanel to expand perfume sales beyond France
and Europe and to develop other perfumes — for which she required investment capital,
business acumen, and access to the North American market. To that end, the
businessman Théophile Bader introduced the venture capitalist Pierre Wertheimer to Coco
Chanel. Their business deal established the Parfums Chanel Company, a parfumerie of
which Wertheimer owned 70 per cent, Bader owned 20 per cent, and Chanel owned 10 per
cent; commercial success of the joint enterprise was assured by the Chanel name.
Nonetheless, despite the success of the Chanel couture and parfumerie, the personal
relations between Coco and her capitalist partner deteriorated, because, Coco said that Pierre
Wertheimer was exploiting her talents as a fashion designer and as a
businesswoman. Wertheimer reminded Chanel that he had made her a very rich woman;
and that his venture capital had funded Chanel's productive expansion of
the parfumerie which created the wealth they enjoyed, all from the success of No. 5 de
Chanel.
Nevertheless, unsatisfied, the businesswoman Gabrielle Chanel hired the attorney René de
Chambrun to renegotiate the 10-per-cent partnership she entered, in 1924, with the Parfums
Chanel Company; the lawyer-to-lawyer negotiations failed, and the partnership-percentages
remained as established in the original business deal among Wertheimer, Bader, and Chanel.
Elegance and the war — 1930s–1940s
From the gamine fashions of the 1920s, Coco Chanel had progressed to womanly fashions in
the 1930s: evening-dress designs were characterized by an elongated feminine style, and
summer dresses featured contrasts such as silver eyelets, and shoulder straps decorated
with rhinestones - drawing from Renaissance-time fashion styling. In 1932, Chanel presented
an exhibition of jewelry dedicated to the diamond as a fashion accessory; it featured
the Comet and Fountain necklaces of diamonds, which were of such original design, that
Chanel S.A. re-presented them in 1993. Moreover, by 1937, the House of Chanel had
expanded the range of its clothes to more women and presented prêt-à-porter clothes
designed and cut for the petite woman.
During the Second World War (1939–45), Coco Chanel closed shop at Maison Chanel —
leaving only jewelry and parfumerie for sale — and moved to the Hôtel Ritz Paris.
Meanwhile, because of the Nazi occupation's official anti-Semitism, Pierre Wertheimer and
family, had fled France to the U.S., in mid-1940. Later, in 1941, Coco Chanel attempted to
assume business control of Parfums Chanel but was thwarted by an
administrative delegation that disallowed her sole disposition of the parfumerie. Having
foreseen the Nazi occupation policy of the seizure-and-expropriation to Germany of Jewish
business and assets in France, Pierre Wertheimer, the majority partner, had earlier, in May
1940, designated Felix Amiot, a Christian French industrialist, as the "Aryan" proxy whose
legal control of the Parfums Chanel business proved politically acceptable to the Nazis, who
then allowed the perfume company to continue as an operating business.
Occupied France abounded with rumours that Coco Chanel was a Nazi collaborator; her
clandestine identity was secret agent 7124 of the Abwehr, code-named "Westminster".[11] As
such, by order of General Walter Schellenberg, of the Sicherheitsdienst, Chanel was
dispatched to London on a mission to communicate to British Prime Minister Winston
Churchill the particulars of a "separate peace" plan proposed by Reichsführer-SS Heinrich
Himmler, who sought to avoid surrendering to the Red Army of the Soviet Russians.
At War's end, upon the Allied liberation of France, Chanel was arrested for having
collaborated with the Nazis. In September 1944, the Free French Purge Committee,
the épuration, summoned Chanel for interrogation about her collaborationism, yet, without
documentary evidence of or witnesses to her collaboration with the Nazis, and because of
Churchill's secret intervention in her behalf, the épuration released Coco Chanel from arrest
as a traitor to France. Despite having been freed by the political grace of Churchill, the
strength of the rumours of Chanel's Nazi collaboration had made it not possible for her to
remain in France; so Coco Chanel and her German lover, Hans Günther von Dincklage,
went into an eight-year exile to Switzerland.
In the post–war period, during Coco Chanel's Swiss exile from France, Pierre Wertheimer
returned to Paris and regained formal administrative control of his family's business holdings
— including control of Parfums Chanel, the parfumerie established with his venture capital,
and successful because of the Chanel name.
In Switzerland, the news revived Coco Chanel's resentment at having been exploited by her
business partner, for only ten per cent of the money. So she established a rival
Swiss parfumerie to create, produce, and sell her "Chanel perfumes". In turn, Wertheimer,
the majority capital stock owner of Parfums Chanel, saw his business interests threatened,
and his commercial rights infringed because he did not possess legally exclusive rights to the
Chanel name. Nonetheless, Wertheimer avoided a trademark infringement lawsuit against
Coco Chanel, lest it damage the commercial reputation and the artistic
credibility of his Chanel-brand parfumerie.
Wisely, Pierre Wertheimer settled his business- and commercial-rights quarrel with Chanel,
and, in May 1947, they renegotiated the 1924 contract that had established Parfums Chanel
— she was paid $400,000 in cash (wartime profits from the sales of perfume No. 5 de
Chanel); assigned a 2.0 per cent running royalty from the sales of No. 5 parfumerie; assigned
limited commercial rights to sell her "Chanel perfumes" in Switzerland; and granted a
perpetual monthly stipend that paid all of her expenses. In exchange, Gabrielle Chanel
closed her Swiss parfumerie enterprise, and sold to Parfums Chanel the full rights to the
name "Coco Chanel".
Resurgence — 1950s–1970s
In 1953, upon returning to France from Switzerland, Coco Chanel found the fashion
business enamoured of the "New Look" (1947), by Christian Dior; the signature shape
featured a below-mid-calf-length, full-skirt, a narrow waist, and a large bust (stylistically absent
since 1912). As a post–War fashion that used some 20 yards of fabric, the House of
Dior couture renounced wartime rationing of fabric for clothes.
In 1947 — after the six-year austerities of the Second World War (1939–45) — the New Look
was welcomed by the fashion business of Western Europe because sales of the pretty clothes
would revive business and the economy.
To regain the business primacy of the House of Chanel, in the fashion fields of haute
couture, prêt-à-porter, costume jewelry, and parfumerie, would be expensive; so Chanel
approached Pierre Wertheimer for business advice and capital. Having decided to do
business with Coco Chanel, Wertheimer's negotiations to fund the resurgence of the House
of Chanel, granted him commercial rights to all Chanel-brand products.
In 1953, Chanel collaborated with jeweler Robert Goossens; he was to design jewelry to
complement the fashions of the House of Chanel; notably, long-strand necklaces of black
pearls and of white pearls, which high contrast softened the severe design of the knitted-wool
Chanel Suit (skirt and cardigan jacket).
Throughout the 1950s, the sense of style of Chanel continued undeterred; the firm's initial
venture into masculine parfumerie, Pour Monsieur was a successful eau de toilette for men.
Chanel and her spring collection received the Fashion Oscar at the 1957 Fashion Awards in
Dallas. Pierre Wertheimer bought Bader's 20 per cent share of the Parfums Chanel, which
increased the Wertheimer percentage to 90 per cent.
Later, in 1965, Pierre's son, Jacques Wertheimer, assumed his father's management of
the parfumerie. About the past business relationship, between Pierre Wertheimer and Coco
Chanel, the Chanel attorney, Chambrun said that it had been "one based on a businessman's
passion, despite her misplaced feelings of exploitation . . . [thus] when Pierre returned to
Paris, full of pride and excitement [after one of his horses won the 1956 English Derby]. He
rushed to Coco, expecting congratulations and praise. But she refused to kiss him. She
resented him, you see, all her life."
Coco Chanel died on 10 January 1971, at the age of 87. She was still designing at the time of
her death. For example, in the (1966–1969) period, she designed the air hostess uniforms
for Olympic Airways, the designer who followed her was Pierre Cardin. In that time,
Olympic Airways was a luxury airline, owned by the transport magnate Aristotle Onassis.
After her death, the leadership of the company was handed down to Yvonne Dudel, Jean
Cazaubon and Philippe Guibourgé.
After a period of time, Jacques Wertheimer bought the controlling interest of the House of
Chanel. Critics stated that during his leadership, he never paid much attention to the
company, as he was more interested in horse breeding. In 1974, the House of Chanel
launched Cristalle eau de toilette, which was designed when Coco Chanel was alive. 1978 saw
the launch of the first non-couture, prêt-à-porter line and worldwide distribution of
accessories.
Alain Wertheimer, son of Jacques Wertheimer, assumed control of Chanel S.A. in 1974. In
the U.S., No. 5 de Chanel was not selling well. Alain revamped Chanel No.5 sales by
reducing the number of outlets carrying the fragrance from 18,000 to 12,000. He removed
the perfume from drugstore shelves and invested millions of dollars in advertisement for
Chanel cosmetics. This ensured a greater sense of scarcity and exclusivity for No.5, and sales
rocketed back up as demand for the fragrance increased. He used famous people to endorse
the perfume — from Marilyn Monroe to Audrey Tautou. Looking for a designer who could
bring the label to new heights, he persuaded Karl Lagerfeld to end his contract with fashion
house Chloé.

The post-Coco era

In 1981, Chanel launched Antaeus, an eau de toilette for men. In 1983 Karl Lagerfeld took
over as chief designer for Chanel. Like Chanel, he looked into the past as inspiration for his
designs. He incorporated the Chanel fabrics and detailing such as tweed, gold accents, and
chains. Lagerfeld kept what was signature for Chanel but also helped bring the brand into
today.
In later collections Lagerfeld chose to break away from the ladylike look of Chanel and
began to experiment with fabrics and styles. During the 1980s, more than 40 Chanel
boutiques opened worldwide. By the end of the 1980s, the boutiques sold goods ranging
from US$200-per-ounce perfume, US$225 ballerina slippers to US$11,000 dresses and
US$2,000 leather handbags. Chanel cosmetics and fragrances were distributed only by
Chanel outlets. Chanel marketer Jean Hoehn explained the firm's approach, saying, "We
introduce a new fragrance every 10 years, not every three minutes like many competitors. We
don't confuse the consumer. With Chanel, people know what to expect. And they keep
coming back to us, at all ages, as they enter and leave the market." The 1984 launch of a new
fragrance, in honor of the founder, Coco, continued the label's success. In 1986, the House
of Chanel struck a deal with watchmakers and in 1987, the first Chanel watch debuted. By
the end of the decade, Alain moved the offices to New York City.
In 1994, Chanel had a net profit equivalent to €67 million on the sale of €570 million in
ready-to-wear clothes and was the most profitable French fashion house.
Chanel launched the perfumes Allure in 1996 and Allure Homme in 1998. The House of
Chanel launched its first skin care line, Précision, in 1999. That same year, Chanel launched
a travel collection, and under a license contract with Luxottica, introduced a line
of sunglasses and eyeglass frames.
While Wertheimer remained chairman, Françoise Montenay became CEO and President.
2000 saw the launch of the first unisex watch by Chanel, the J12. In 2001, watchmaker Bell &
Ross was acquired. The same year, Chanel boutiques offering only selections of accessories
were opened in the United States. Chanel launched a small selection of menswear as a part of
their runway shows.
In July 2002, a jewelry and watch outlet opened on Madison Avenue. Within months, a
1,000-square-foot (90 m2) shoe/handbag boutique opened next door. Chanel continued to
expand in the United States and by December 2002, operated 25 U.S. boutiques.
Chanel introduced Coco Mademoiselle and an "In-Between Wear" in 2003, targeting younger
women, opened a second shop on Rue Cambon, opened a 2,400 square feet (220 m2)
boutique in Hong Kong and paid nearly $50 million USD for a building in Ginza, Tokyo.
In 2018, Chanel announced that it would be moving its global headquarters to London.
In December 2018, Chanel announced that it would ban fur and exotic skins from its
collections.

C.E.O.
Nick Hochland is the currently CEO of Chanel since he succeeded in 2016.

Logo
The Chanel logotype comprises two interlocked, opposed letters-C, one faced left, one faced
right. The logo was designed by Coco Chanel herself in 1925 and remains unchanged to this
day. A popular story suggests that it was inspired by the stained glass windows in an Aubazine
chapel which featured interlaced curves and also housed an orphanage where Chanel spent
the latter half of her childhood.
Products and services

Haute couture
Chanel is the oldest of the Haute Couture houses in operation, a guardian of exceptional
know-how skills.
Karl Lagerfeld, the artistic director of the House of CHANEL since 1983, attributes his
highly detailed sketches to the two different ateliers. The head seamstresses interpret his
sketches that in turn become cotton toiles, the first version of the garment shown to the
designer.
The House shows two Haute Couture collections per year, made up of day and evening
wear. The collection contains between 60 and 80 made-to-measure outfits, produced by hand
in the Parisian ateliers.
On average, it takes more than 200 hours of work to make a bespoke suit and up to 1500
hours to create a dress.
The collection is then presented to private clients at exclusive events.

Perfume

In 1924, Pierre Wertheimer founded Parfums Chanel, to produce and sell perfumes and
cosmetics; the parfumerie proved to be the most profitable business division of the Chanel
S.A. Corporation.

Makeup and skincare

Cosmetics are the most accessible Chanel product, with counters in department stores across
the world, including Harrods, Galeries Lafayette, Bergdorf Goodman, Hudson's Bay,
and David Jones, Wojooh, John Lewis, Debenhams, Boots as well as its own beauty
boutiques.

Fine Jewelry

Chanel 'High Jewellery' was founded in November 1932. Chanel debuted 'Bijoux de
Diamants' at her Faubourg Saint-Honoré, Paris mansion. In 2012, the company created a
special collection to celebrate Diamants' 80th anniversary. Current collections include High
Jewellery, Camelia, Comete, Baroque, 1932, Ultra, Bridal and Jewellery Watches.
Watches

The Chanel wristwatch division was established in 1987. In 1995, division presented a second
design, the Matelassé. Although the Première and Matelasséwristwatches were successful
products, the presentation, in 2000, of the Chanel J12 line of unisex style wristwatches, made
of ceramic materials, established Chanel wristwatches as a Chanel marque. The J12 line of
wristwatches features models in four dial-face sizes: 33mm, 38mm, 41mm, and 42mm. In
2008, Chanel S.A. and Audemars Piguet developed the ceramic Chanel AP-3125 clockwork,
exclusive to the House of Chanel.

Marketing
Pricing:

Not compromising with quality is the aim of the brand, and providing exquisite products is its
purpose. The pricing policy of Chanel is based on a number of factors. The strategy is
of premium pricing as it is centered on the fine quality of the products as well as the time it
takes to make the particular product. It takes an astonishing long time to complete a Chanel
product, because it goes through various processes, such that the end result is of
exceptionally high standard.

Skilled individuals, who are an expert in textiles and design, are involved in making the
clothes. Thus, Chanel is a brand that is eagerly waited on by the clients. Hence, the high price
of the clothes, as the customers are rich enough to pay extraordinary prices for this sought
out brand.

Place:

Chanel stores are operating in nearly three hundred and ten boutiques worldwide with six in
Oceania, two in South America, one hundred and twenty eight in North America, ninety-four
in Asia, ten in the Middle East and seventy in Europe. Thus, the exclusivity plays a major
part in its premium price. As the buyers belong to the wealthy class, the location of the stores
is very important and special affluent areas are chosen for its boutiques. In England, the
Chanel store is located in Manchester and London. In Japan, the location is in the high-class
area of Ginza District. Some of the stores are located in famous airports to tap the holiday
travelers who would be interested in spending money while travelling and subsequently
shopping. As the frequent travelers are the wealthy business class, the stores have been a huge
hit amongst them.

Each of the stores reflects the expensive and chic image of the brand. As the Chanel
boutiques are very far and few and many towns and cities lack the stores, the company has
come up with a full proof plan. It has websites for online shopping and professionals who are
efficiently trained to handle the distribution of the goods. This scheme has resulted in
maximum sales and has helped in advertising the products. Chanel products are displayed in
various department stores that are situated in upmarket worldwide locations like Galeries
Lafayette, Harrods, Bergdorf Goodman, David Jones, Hudson’s Bay and its own boutiques.

Promotions:

As the products are premium, so is its promotional policy pricey. Chanel advertises in only
the most expensive fashion magazines that cater to influential buyers. Magazines like “Marie
Claire” that are glossy, stylish and polished have a lot of influence with its readership base
who constitute of professionals earning a huge amount of money or are genuinely rich and
aristocratic women and men. Publishing advertisements in these magazines is strategically
very profitable as the viewers can easily check the new and upcoming trends over here. In a
recent advertisement, the model was dressed in intricate and expensive material with a black
and white background. The image came out as classy and sophisticated with a universal
appeal.

The driving force behind its products has always been exclusivity and so its advertisements
reflect its own inner thoughts. Some of its famous brand ambassadors and models and actors
are Carole Bouquet, Marilyn Monroe, Lucia Hiriart, Keira Knightley, Anna Moughlalis,
Vanessa Paradis and Nicole Kidman who have immortalized the brand name that symbolizes
the heritage, lineage and the mastery in providing A-One products.