In the world of luxury goods, challenging the throne of the dream bag, Hermès Birkin, is considered the ultimate goal. However, it seems that the giant CHANEL, despite its hard efforts, is facing difficulties. In contrast, the much smaller American brand The Row is emerging as an even more notable contender.
The situation between these two famous French brands became clearer last year. CHANEL’s latest performance showed a 4% sales decline in 2024 and nearly a one-third drop in operating profit. On the other hand, Hermès grew strongly with sales increasing by 15% and profits rising by 9%, underscoring its unmatched strength.
CHANEL’s main ‘strategy’ has been aggressive price hikes. The iconic Classic Flap bag’s price surged from $5,800 in 2019 to $10,800 today (from approximately 188,000 THB to 350,000 THB). Adjusted for inflation, the price should have been about $7,400 (around 240,000 THB) only.
This price increase narrowed the premium paid to buy a Birkin over a CHANEL — the ‘Birkin Premium’ — from $4,000 in 2019 down to just $200 in 2023.
But the results were not as expected. What proves an item’s status as a ‘must-have’ is its resale price. While the Birkin 25, with a retail price of about $11,400 (approximately 370,000 THB), can be resold at more than double that price, CHANEL’s Classic Flap resale value dropped to just 77% of retail, down from 83% in 2019.
Hermès’ success equation is not about sky-high pricing but rather the ‘game’ of exclusivity and limited accessibility. They have cultivated a culture where customers must build relationships and spend on other products first — known as ‘pre-spend.’ To get a Birkin 25 in Togo leather, a customer may need to spend over $10,000 (about 324,000 THB) on other items to build their profile.
Meanwhile, as CHANEL struggles, The Row is employing a similar but even more refined strategy. The Margaux bag, priced at $4,700 (about 152,000 THB), has become a hot item with resale prices in the secondhand market exceeding its retail price by over 41%. This phenomenon is rare globally, seen only with a few items such as the Birkin, Rolex watches, and Patek Philippe.
Interestingly, last year, the investment company of the billionaire family behind CHANEL also acquired shares in The Row, reflecting recognition of the latter’s superior strategy.
What makes this strategy fascinating is that the Margaux bag is not handmade like the Birkin, meaning The Row could increase production if desired. However, they intentionally limit production to create a sense of ‘rarity,’ willing to sacrifice short-term profits for sustainable long-term demand.
The story of these three brands offers an important ‘lesson’ for the luxury industry: to create a legendary and truly desirable product, simply charging exorbitant prices isn’t always the answer. The key lies in crafting a sense of uniqueness paired with the desire to own it — something that usually only happens when the product is not meant for everyone.
Note: Exchange rate used is 1 USD = 32.43 THB as of July 15, 2025.