The math of the post-pandemic luxury boom speaks to the problems Dior and Chanel must now solve. From 2020 to 2023, the average price increase in the luxury sector reached 36%. Dior increased prices by 51% during that period. Chanel went further and increased prices by 59%.
The price of the Chanel medium flap has almost doubled since 2019. According to Bain’s analysis, these increases drove more than 50 million aspiring shoppers out of the luxury category entirely. These are customers who make several meaningful luxury purchases a year and have the financial wherewithal to do so, and their departure has damaged both the scale and cultural momentum of major houses.
Both brands are now moving to rebuild the lower echelons of their products with an urgency that reflects just how damaging the exodus has been. Dior leather goods priced under 4,000 euros accounted for 69% of the range in January 2023. By January 2026, that number had increased to 87%, with new handbag silhouettes and small leather goods being intentionally reintroduced at accessible price points.
Chanel’s change is even more dramatic in proportion. The brand increased the share of leather goods priced under 4,000 euros from 4% at the beginning of 2023 to 30% by January 2026. For the house, which has effectively walled off the handbag category above €4,000, analysts described the change as a “philosophical shift”.
The strategy has been carefully calibrated to avoid eroding the exclusivity that makes the brand worth pursuing. Neither house is lowering the price of the iconic bag. Chanel Classic Flap and Lady Dior maintain high price points while maintaining an aspirational upper limit that provides an overall price pyramid structure.
Instead, the expansion focuses on accessories, bag charms, wallets, scarves and what industry observers describe as playful and whimsical items. This gives aspiring shoppers a way to engage with brands without making a financial investment, something that has become impossible for the middle class.
Both houses have new creative directors – Dior’s Jonathan Anderson and Chanel’s Matthieu Blazy – whose first collections have caused real excitement. Their debut provides narrative cover for the product and pricing adjustments, giving both brands a fresh, creative story to sell alongside a more approachable proposition.
The problem is that desire is only one variable in the purchasing equation. BoF correspondent Joan Kennedy clearly explained the underlying uncertainty: “How much of this is a question of desire versus ability to buy is an open question. Maybe a lot of shoppers want these products and really like them, but don’t have the ability.”
The macroeconomic backdrop for 2026, including rising oil prices, delayed interest rate cuts by the Federal Reserve, and geopolitical instability due to the Iran war, creates headwinds that cannot be resolved through product adjustments alone. Both brands are operating with significant strategic intelligence, but are also struggling to recapture consumers whose incomes, confidence and buying habits have all changed since 2019.
