How Dior and Chanel Are Tackling Fashion’s Pricing Problem

With new collections from Chanel and Dior finally in stores, two of the fashion industry’s highest profile creative reboots are being put to the test. On the other side of the value equation, they’re also addressing the issue of pricing after years of implementing some of the sector’s biggest hikes.

Mired in a two-year slump, the luxury industry has struggled to find its footing since the post-pandemic boom wound down, with pricing emerging as a key concern. The problem is most acute at French megabrands Dior and Chanel, which led industry price increases that were much higher than the long term average, according to Bernstein.

Chanel and Dior raised prices by 59 percent and 51 percent respectively on selected key products between 2020 and 2023, compared to an industry average of 36 percent, Bernstein analysts wrote.

The steep price hikes contributed to over 50 million shoppers leaving the market between 2022 and 2025, Bain has said.

Chanel sales were down 4.3 percent in 2024 – its first drop since 2020 – while Dior has lagged stablemate Louis Vuitton, both part of LVMH’s key fashion and leather goods division which has suffered two years of declining sales, down 5 percent last year.

Luxury growth this year will be driven by volume, say analysts. Brands have few other options, having eroded much of their pricing power after years of so-called greedflation, when price hikes accounted for a large part of sales growth.

Leather goods – the industry’s traditional growth driver that has lost steam during the recent slump – will be crucial for bringing back sales growth in the coming year.

Commercial rollouts are now filling in the picture of how the brands will use merchandising and pricing tools to address one of the industry’s key challenges: winning back shoppers.

“There is no alternative to rebuilding [pricing] pyramids and starting to recruit again,” said Erwan Rambourg, global head of consumer and retail at HSBC. “You can survive – especially if you’re a quiet luxury brand – just selling to high net worth individuals for a while, but you’re not ensuring the long term.”

The Handbag Charm Offensive

While Chanel and Dior are not lowering the cost of entry for handbags – tinkering too much with the core carries the risk of eroding the perception of exclusivity – both are bulking up the lower end of their leather goods selection.

At Dior, the proportion of leather goods priced below €4,000 has risen to account for 87 percent of the overall offer, compared to 69 percent at the same time three years ago, according to figures from analytics firm Data&Data, which scrapes brands’ online catalogues.

For Chanel, leather goods priced below €4,000 have swelled from a proportion of 3.6 percent just three years ago to account for nearly a third of the overall offer, Data&Data figures showed.

In an emailed statement, Chanel said: “Chanel offers a wide and diverse range so that every customer can find a bag that suits her.”

With Blazy’s Spring/Summer 2026 pre-collection, the label is also throwing the focus on its lower-priced handbags, adding more purses under €5,000, including the Small Flap, a new Hobo, Bowling bag and clutches, according to an analysis of the selection on its website.

At Dior, Anderson has added the Bow Bag and Trianon, priced at €3,700, alongside revamped book totes, which start at €2,300 for the miniature size.

Dior’s new Spring/Summer 2026 collection also features a growing assortment of items under €1,000, with the number of small accessories like wristlets, card holders and toiletry bags up 27 percent compared to the same seasonal collection in 2023, according to retail intelligence firm Edited.

Products below €1,000 made up 43 percent of new SKUs at Dior, JP Morgan found in January. These items — bag charms, brooches, ballet flats, scarves and sneakers — serve to hook shoppers until they are ready to buy into the expensive handbag category. A new Saltwind sneaker model, at €820, starts at a slightly lower price than the carry-over Walk’n Dior sneakers, priced at €890. Jeans run from €1,300 to €2,300, also slightly down from the prior €1,600 to €2,500 range of carryover styles, noted JP Morgan.

Chanel’s non-leather purse-on-chain products and leather micro clutch with strap, which run from €3,000 to €4,000, and Dior’s Bow Chain Clutch (€1,600) and My Dior Mini bag (€2,600) — not quite full handbags but more than a wallet — are among emerging entry points.

“You can think about the layer of entry items in a more holistic way,” said Claudia D’Arpizio, luxury lead at consultancy Bain. “You have to have a compelling offer below a certain psychological threshold that’s not an investment.”

As they inject freshness at lower price points, the fashion houses are also highlighting the new products prominently. Dior, for example, appears to be aiming to turn its new J’Adior ballet flat, priced at €890, into a consumer hit through partnerships with influencers including Christie Tyler, Tina Leung and Aimee Song.

The more entry-focused strategy was evident in commercial rollouts, as well as the styling on both designers’ runway debuts in October, according to Jessica Ramirez, founder of research firm and advisory The Consumer Collective: “It’s a bit more commercial, there’s things you can layer that have become entry statements: smaller bags, bag charms, accessories, jewellery, socks and hats.”

Brands have to try to pull all the levers at their disposal – adjusting product, prices and teams, including designers, said Berenberg analyst Nick Anderson in an email to BoF.

However, there may be factors beyond their control. Rising costs and lower confidence are still weighing on many shoppers.

“A big issue for aspirational customers is not willingness to buy, but rather ability to buy,” he said.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.