In China, Chanel might be laying off 50% of its staff

A few days after the announcement of the demoralizing revenue results of the LVMH group, a piece of news perfectly aligned with the crisis affecting the luxury market comes from the house of Chanel. As stated by Pambianco, In preparation for a potential sales decline in China, the brand is reportedly planning a massive staff reduction, which according to rumors (which, however, come from the press) could reach up to 50% in some divisions. In addition to the sales staff in Chanel’s Chinese boutiques, the reduction would primarily involve administrative and managerial staff, although for now, a spokesperson for the fashion house has denied the information, stating that nothing official has been communicated yet. Additionally, it is said that the brand has halted all hiring projects in China, even those already in progress. 

The news of potential staff cuts at Chanel seems to come like a bolt from the blue, despite the fact that the luxury crisis has been spreading for some time in every corner of the world - especially in China, where phenomena such as the "luxury shame" are curbing the sales of high-profile goods. What seems particularly strange is not so much the decision to reduce staff, but the fact that the news involves a brand like Chanel, an institution in the luxury sector that over the years has demonstrated, even in the face of crises and slowdowns, to be unstoppable. Like Brunello Cucinelli, who, unlike all other luxury brands, this year recorded a significant increase in revenue, the brand with the double C is an evergreen, a company that can find refuge in its brand equity during times of uncertainty, cultivated over decades. However, Chanel's latest investments show how the brand is reducing its dependence on China: over the past year, it has invested in real estate in Paris, supply chain activities in Italy, and The Row. If confirmed, the downsizing plan in China would follow the market philosophy that led Cucinelli to success in the last fiscal year, which involves less focus on sales in the East and more dedication to the brand’s main "zero-kilometer" customers.     

After sharing the positive results of the 2023 fiscal year, Chanel’s Chief Financial Officer Philippe Blondiaux explained the house’s expansion plans in China, but soon after, the luxury sector began to experience losses throughout the country. In May, CEO Leena Nair had stated that demand for Chanel products had decreased, although she promised a good recovery. While rumors of massive staff cuts in China spread, Chanel is preparing for two major events in China: the Cruise 2025 show on November 5 in Hong Kong and the Métiers d'Art presentation on December 3 in Hangzhou. Just last week, it announced that the next Cruise 2026 will be held on Lake Como.