How Dior and Chanel Are Winning Back Aspirational Shoppers

0:07Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. I'm senior correspondent Sheena Butler-Young. And I'm executive editor Brian Baskin. The luxury industry is in the middle of a reset. After years of aggressive price increases that drove post-pandemic growth, brands are now grappling with slower sales and worse, a real question about whether they can stay relevant when so few people can afford to buy their products. This week, BOF retail correspondent Joan Kennedy reports on how Dior and Chanel are reworking their assortments and pricing architecture to re-engage aspirational shoppers.

0:48Joan, welcome to The Debrief. Hi, thanks for having me. So Joan, I want to start first with why you chose to zero in on Dior and Chanel. I imagine it's because they're probably the worst offenders of price hikes. Is that right? Yes, that is part of the reason. As Brian was saying, luxury has been in the midst of this multi-year slump following the post-pandemic boom, and pricing has really emerged as this key concern. Many luxury brands raised prices significantly in that period. According to analysis by Bernstein, the average price hikes between 2020 and 2023 across the luxury industry was 36%.

1:30At Dior and Chanel, prices rose 51 % and 59 % respectively. And one of the key things is the Chanel medium flap has nearly doubled in price since 2019. And so yes, two of the places that fashion's pricing problems are most pronounced. Both brands have also recently installed new creative directors that have really reignited excitement around them. Jonathan Anderson at Dior and Mathieu Blasie at Chanel. And their debuts have been very closely watched from the spring 2026 runways late last year to Couture just a few weeks ago. And finally, we are starting to see new products from these designers trickle into stores, which has provided us with a little hint at how these brands will address those pricing problems in the year ahead.

2:24And the customers that they're going after are these 50 million shoppers that Bain says left luxury's orbit when these price hikes came into effect. And I'm assuming that's people who maybe weren't, you know, splurging a million dollars in a shopping spree. These are the entry level type of customers, right? This is us. We're talking about ourselves here. Speak for yourself. Yes. A big concern for luxury in general right now is re-engaging that person that maybe left the market or people that haven't entered the market yet. And yeah, Bain did this big report last year and they estimated that it was over 50 million shoppers.

3:02And that person has traditionally been called the aspirational customer. It's a person who makes a few luxury purchases a year, maybe somebody who's stretching up a little bit into the category. Brian, maybe not you, but me. A younger shopper as well. It's a group that is really important. They drive volume and growth for brands and can really generate excitement too. But it's a group that has perhaps been a little bit ignored as the luxury market focused on high net worth and top shoppers. Now, when we talk about entry level, it's all relative with these brands. Tell us about what kind of products we're talking about when we say Chanel and Dior are introducing more entry level products.

3:50Yes. So in my analysis, I found that Dior and Chanel both invested heavily in small leather goods and accessories under 4 ,000 euros. And then the other thing that they did that was really interesting is that they put out new handbags at the lower end of their handbag pricing structure. So at Dior, that was the bow bag. Jonathan Anderson introduced the bow bag, which is a smooth leather pouch for 3 ,700 euros, for example. And then Chanel added a small flap, which is a simple over the shoulder bag for under 5 ,000 euros, as well as a new hobo and a bowling bag at that same price point. And it's a pretty dramatic shift.

4:37I'm looking at this chart in your story and Dior in 2023, 69 % of leather goods were under €4 ,000. Today, it's 87%. And Chanel, only 4 % were below in 2023. And now it's 30%. Let's maybe double click on the problem a little bit too. It's not that Chanel and Dior woke up today and said, we need to go back to this aspirational customer. They were catering to the 1 % and successfully for about four years. And there was a revenue fall off that both brands experienced starting in 2024, right? Can we talk about the scale of how much they were impacted by just over indexing on the 1 % and then now forgetting about this aspirational shopper?

5:18There was a sales decline at both brands. Yes. Chanel sales fell 4.3 % in 2024, which was its first drop since 2020. And LVMH doesn't break out sales for brands, but Dior has lagged. It's stablemate Louis Vuitton, which are both part of LVMH's fashion and luxury goods division, which has suffered two years of declining sales. There's this whole other tier of products below the leather goods that we're talking about. Things like bag charms, headbands, belts, wallets. And it seems like these brands are also investing in those categories again, too. I mean, that's like the true entry level, right?

5:57Yes. Yeah. So brands have been introducing those sorts of like fun little whimsical items at the bottom, which has like a good psychological effect on all shoppers, not just these like new ones or aspirational ones, but maybe that traditional one who comes into the store all the time. And now suddenly they see, oh, there's a great little bag charm right there. That's a great price. We should say, though, what does a Dior bag charm cost? It's a mere$1 ,000 maybe, right, Joan? Well, very entry level. My cute little clover bag charm costs 500 euros. And I also wanted to flag, what does a Chanel headband cost?

6:40900 euros. My daughter's birthday is coming up next month. I think I know what I'm getting here. Are you recasting yourself as an aspirational shopper now, Brian? Oh, no, no, no. I'm maintaining my 1 % persona. And that's going to be the fun little gift I get her when I'm shopping for myself. Fair enough. Well, I think the thing to focus on with these categories as well is that both brands are really upping the creativity that they're injecting into these categories, which is, you know, maybe the price isn't changing, but it kind of like is trying to hammer home that like there's a little bit more value, you know, like trying to really ride the momentum brought by these new creative directors and kind of get new marketing and things like that.

7:26Oh, that's a great point. Because you're right, like we do associate these little, you know, choshkis and things like that with being kind of the down market stuff that these brands push on, you know, people who can't afford their real products. But I actually do agree. I mean, even just the ones, you know, you showcased in the graphics in your story are definitely more fun and creative than just, you know, stamping their logo on a plain wallet and saying, here, give us$1 ,000 now. Yes, definitely. And I think that's an important point, because when we talk about luxury's pricing problems. It's not just exclusively pricing, but it's more nuanced.

8:02It has to do with how a shopper is thinking about value for money, creativity. Luxury is such an emotional purchase that, yeah, it's not all about pricing. You had an analyst in your story that talked about the fact that even for all their efforts right now to engage this, I don't want to call them a lower tier shopper, but the one that's a little more price conscious, they might still not have the ability to buy in this economy, right? Like they're up against a huge challenge in 2026, even with these tchotchkes and psychological, emotional things that they're putting into the market. There's still a true challenge when people are sort of cash strapped.

8:41It's definitely a big open ended question is how much of this is a problem with desire versus ability to purchase. Yeah, maybe a lot of these shoppers do want these products, are really excited by them, but just don't have the ability. Yeah, we're dealing with a lot of macroeconomic challenges, lingering inflation, fear of job losses, and those things really affect this so-called aspirational shopper that brands are trying to re-engage. Yeah, it's tough. I mean, we ran a story earlier this week about analyzing some of the recent list hot product indexes and luxury brands used to just dominate that top to bottom.

9:23And now it's all these much, you see Ralph Lauren, you know, Uniqlo, Ugg, all these, you know, much more mass brands are selling exactly these kinds of products. And people seem just as excited about those as the ones coming from Chanel and Dior and recapturing that mindshare is going to be really difficult, I think. I think Brian makes a good point. I think we're just in a tough macroeconomic climate. There's also like geopolitical issues. It's just there's just a lot of negative pressures. And it sounds like brands just need to pull all the levers and there's no way to fix things externally.

9:56But you just try everything at your disposal. Yes, definitely. Praise products. They've already created a lot of excitement with these new designers. But it's also about, you know, how are they bringing people into stores? How are they merchandising those stores? And that sort of thing, too. We'll be back with more of The Debrief right after this.

10:42Like there's the, like Chloe's, not Dior Chanel, but like Chloe, their bags, they show you how to like dress them with the charms. Like trying to encourage you to see the opportunity in these entry level price point products. And I think that's a way to wink at like, how do you do it? Not just this is cool, but here's what it could look like when you put it together. I've seen that for sure. Yeah, I haven't been into the boutique, but I've seen photos and it looks like they're really prominently displaying those book totes. That is one of the product lines that Jonathan Anderson has given a big refresh to.

11:18He developed these really special first edition totes. I wonder if we're also going to see the customer service change if they are courting these shoppers again. I remember, you know, our editor-in-chief, Imran Ahmed, wrote that great column, I think, last year about how just annoying and kind of galling all the lines and the lack of warmth in these stores was. which when all you care about are the people dropping a million dollars in a single trip, you know, that makes sense because they have their personal concierges and who cares about everyone else. But I imagine they're going to have to, you know, roll out the welcome mat if they're actually looking to get the people who would want to buy these charms or the entry-level bags again.

11:58Yeah, that will be interesting to see. And especially, yeah, it is so intimidating to walk into a luxury store for a lot of people. And yeah, today people have so many other routes to buy luxury goods, including resale, which is I think where we've seen a lot of this type of shopper flock to. Yeah, it feels like this is a test for luxury to truly come down to earth a little bit more. I don't know if they're going to pass the test, but I think if ever there was a time for luxury to widen its customer aperture. It seems like now is the time. Let's keep talking about that. I think that's an interesting point, but it's also a question because, you know, the whole point of a luxury brand is that it's exclusive and conveys status.

12:44You know, their goal is not to become coach. It's to sell something people think has more value than coach and therefore commands a higher price. And, you know, that's why when we talk about entry level with Chanel, we're talking about 900 euro headbands. We're not talking about something that costs$100. And I think they are very conscious that they can't edge too far in that direction or the whole enterprise crumbles at some point. Yeah. And I think to that point, we've really seen them preserve the price point of the core handbags, the Lady Dior and the classic flap and preserve those price points to kind of maintain that allure of exclusivity while also, you know, doing the same thing, bringing fresh creative to it.

13:35On that Lady Dior, for example, Jonathan Anderson added a new little bow to it. That's smart. I mean, there's a lot of American brands that do this really well and that we've written about where the range of prices they offer is just astronomical compared to the European luxury brands. And they managed to do it, Ralph Lauren being the classic example, but there's many others. They managed to do it without seeming cheap, even if they sell some cheap stuff. And I bet there is room for some of these luxury brands to do the same thing. I think they call that like market segmentation or something. Or isn't it like a marketing?

14:09There's a marketing strategy behind this. There's a way to speak to the 1 % or to keep the halo of exclusivity, but also court a lower end customer. Joan, on the marketing point, have you seen the marketing change at all in your reporting? Are they doing anything to say, hey, aspirational shopper, but also don't forget us 1%, but speaking to them in a different way? That's an interesting point. One thing that I noticed was that Dior did a partnership with a few influencers for its new ballet flat, which is priced at 890 euros. And to me, that was, you know, a kind of signal of, okay, let's try to turn this into a commercial hit.

14:50Yeah, ballet flats. I mean, everyone's trying to have the it ballet flat right now. But I'll note again, that list index, the one that's on there now is from Ugg, and it costs, I think$120. And that's been true all year. Like when ballet flats first hit, it was the Miu Miu one that cost about$1 ,000. And then there were some from Alaya. And now it's Ugg, it's Puma. That trend's gone mass. And I'm really curious to see if Dior can recapture the lead in a trending product like that at that price point. Well, you could always get, Natalie, now not just the Chanel headband, but now you've got this very affordable entry-level ballerina flat.

15:27Like the birthday is going to be amazing, Brian. Oh, yeah. You're like adding to the assortment by the minute. My little ballerina deserves the best, Sheena. Indeed. I guess if as Chanel and Dior and the rest introduce more, you know, quote unquote, affordable bags, they're reentering a space that's a lot more crowded than they left it. I mean, can you tell us about some of the new players that moved in when Chanel and Dior moved out of that maybe$1 ,000 to$4 ,000 range? Yeah, definitely. We have seen exciting brands like Jacques Mousse and Polen, for example, really target that affordable around$1 ,000 handbag range and really resonate with choppers.

16:08Not to mention, I mean, it always comes back to Coach in the U.S. I mean, they're even below that price point, but they are the handbag brand and, you know, quite key here, they're the handbag brand for Gen Z as well, which I'm sure is what Dior and Chanel are pretty desperate to court at this point. It's very true. And a point from New York Fashion Week is we've seen a lot of young brands here so far really target that like kind of lower priced handbag range, launch new handbags. Oh, that's so true. Every single brand had a handbag, not to mention the charms and all those other accessories. Like everybody's doing that now.

16:48It's like we positioned luxury at the beginning as if they have their pick of the litter and you just need to talk to this aspirational customer again. Actually, they're entering a new very competitive category by going back to this aspirational shopper and they don't have the lead. So it'll be interesting to watch. Yeah. For just to close things out here, let's do a really quick prediction about whether this gambit's going to work. I will begin because I like to talk. I actually think it will because the one thing the luxury brands have that these other cheaper brands don't is, let's call it thought leadership, creative leadership.

17:23I mean, they have this unique capacity and these uniquely large marketing budgets where if they do hit on an aesthetic or a product that people are interested in, they are experts at pushing it and making sure everyone sees it and everybody wants it. And so if they've got the right designers in place who can make the right products, I think they can definitely win customers back again. I will agree with you, Ryan. You have two amazing creative directors at these brands that have really just driven so much excitement. And I think we will continue to see that. And yeah, you can just you can feel it is that like people are excited about these brands.

18:02And I think that will carry over. I'd love to be contrarian, but I'm going to also sort of agree with you just to make it, you know, a little more interesting. But no, I agree with you both. I think that luxury does a really good job of that that thing we call myth making. and even when luxury struggles, even when the prices have gotten outsized, let's say, and I'm a millennial, I'm not a Gen Z that's into the dupes of it all. I do think people don't truly turn their nose up at Chanel or Dior if they can scrape together the money to buy it. Like, I don't think they've lost that yet. I think people, if they have the means to buy it, they still think of these brands as worth it and prestigious for the most part.

18:40So I think if they can execute on all the things that Joan wrote about and talked about today, I think they're probably going to be fine. Far beat for me to feel sorry for a high-end Uber billion-dollar brand. No, people want to love these brands, and I think they will win that love back someday if they can just get the right products at the right price points. Starting with Brian first. Yes. In line. Little Natalie's headband, yes. Joan, thank you so much for joining us today. Thanks for having me. Please be sure to check out Joan's article, how Dior and Chanel are tackling fashion's pricing problem at businessoffashion.com.

19:19This story and more of Joan's brilliant reporting are available to BOF professional subscribers only, and you can find the links in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies and Eric Bria. I'm Sheena Butler-Young. And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us, and be sure to follow us wherever you get your podcasts.