French luxury brand Chanel has slashed the prices of its handbags in Hong Kong by more than 20 percent from Tuesday, catching the attention of consumers.
Long queues were seen outside the company’s boutiques as word spread of the price cut in several coveted items.
Popular handbags such as Classic Flap Bag and Boy Chanel Flap Bag which were previously listed at HK$48,000 and HK$37,700 respectively were now being offered at HK$38,000 and HK$29,700, according to Ming Pao Daily.
The price adjustment came as the euro has been depreciating against other major currencies in global financial markets, leading to a wide disparity in real terms between prices in Europe and other places in the world.
Narrowing the gap in retail prices was deemed necessary, a Chanel salesperson said.
The price cut was also seen helping sales as the brand has just rolled out its spring collection.
A woman surnamed Wong told Ming Pao that she always wanted to buy a classic Chanel handbag but had hesitated as the price was too high. But now, with the markdown, she was finally able to grab her dream bag for HK$34,000.
Following the European Central Bank’s massive quantitative easing program, the euro has dropped more than 12 percent against the US dollar so far this year.
Given the peg to the US currency, the Hong Kong dollar has strengthened alongside the greenback.
The change in currency values has prompted some European firms to relook their pricing in overseas markets, which is what Chanel did.
Other luxury brands such as Gucci, Hermes, Prada and LV are yet to adjust their retail prices, but analysts believe that they would have to follow the trend sooner or later.
Interestingly, Patek Philippe, an ultra-luxury watch brand from Switzerland, announced a significant markdown in prices of some older models by about 20 percent last month, even though the Swiss franc jumped after it was de-pegged from the euro earlier this year.
Such unusual price-cut moves from premium brands show just how challenging the business environment has become for high-end retailers, which were already suffering from China’s anti-graft campaign and anti-mainland visitor protests by Hong Kong locals.
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