Business of Design

Absurdly High Spenders are Driving Luxury Fashion's Pandemic Rebound

Brands in turn are shelling out for private stores and super exclusive experiences to keep their most valuable clients happy—and shopping.

Chanel’s Staggering Earnings: The stock market has seen no shortage of turbulence in 2022, but you wouldn’t know it from the booming art and designer fashion markets. Case in point: Chanel, which reported a record revenue of $15.6 billion in 2021—a 23 percent surge from pre-pandemic numbers that has been largely driven by spending in the categories of clothing, watches, and fine jewelry.

Given its soaring revenue, the storied fashion house announced it will join the likes of Brunello Cucinelli in opening private stores accessible only to its highest spenders starting in 2023. While Chanel is clearly thriving after the initial shock to its bottom line at the onset of Covid-19, some of its loyal fans aren’t pleased by recent developments. In February, the brand sparked outcries from shoppers after raising prices three times during the pandemic.

Nourish the Hand That Feeds You: There’s a reason high spenders are labeled very important clients, or VICs. Although there are few of them, they make up a substantial percentage of business. In a recent feature, Business of Fashion pulled back the curtain on the notoriously opaque numbers game of cultivating VIC relationships. The top three percent of Mytheresa spenders, for example, are responsible for 30 percent of its revenue. Similar to “whales” at luxury casinos, VICs at Dior reportedly spend a minimum of $100,000 while Mytheresa’s top-tier clients spend in “the high seven figures.” And brands are eager to encourage more of it.

Fashion houses and luxury retailers are allocating substantial budget to hosting and outfitting influential spenders at splashy outings: Givenchy recently flew some of its VICs to the Save Venice charity gala in New York, Alexander McQueen is treating its most valued customers to private fashion shows, and Gucci organized a luxurious trip to Coachella this year for its VICs.

Photos: Cobra Team/BACKGRID

The Kardashian Effect: Though Dolce & Gabbana has adamantly stated that it “hosted”—not sponsored—Kourtney Kardashian and Travis Barker’s lavish wedding weekend in Italy, the New York Times reported that the event has earned “$25.4 million in media impact value” for the design house.

While a handful of wealthy shoppers are charmed by proximity to the brands that value their steady stream of cash (or the potential ROI they represent in the future), the general public is less enthusiastic about the bon vivant lifestyles of the upper crust. Predictably, there’s no shortage of opinions about the “advent of the sponcon wedding,” in the words of Highsnobiety, which joined other fashion and lifestyle media outlets in critiquing the Kardashian-Barker dalliance with Dolce & Gabbana.

Quotable: “Our biggest preoccupation is to protect our customers and in particular our pre-existing customers,” says Chanel’s chief financial officer Phillipe Blondiaux. “We’re going to invest in very protected boutiques to service clients in a very exclusive way.”

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