Chanel fashions a new youth strategy

Chanel, the French fashion, fragrance and cosmetics house, is developing plans to take its prestigious pedigree into the mass market.

The company will launch two initiatives in 1999 which will attempt to establish it as an accessible brand for consumers under 25 – a target market that Chanel has largely ignored to date.

Its range of nail varnishes has already acquired a youth following, but the new initiatives are aimed at competing with rival fashion houses such as Calvin Klein, which scored a major coup with the launch of fragrance cKone.

The move into the mainstream will not be easy for Chanel, and may require a cultural change at the company. In the UK, the plans led to last week’s resignation of marketing director Stephen Gilbert (MW July 23) over differences of strategy and style with UK managing director Didier Sabas.

Gilbert, who resigned after eight years at the company, says: “There will be two very substantial business initiatives which will go a long way towards further establishing Chanel as the mainstream not only in the fragrance but in the beauté (skincare and make-up) sector as well.” A Chanel spokeswoman says: “We are going to aim our cosmetics at a younger consumer, but we will retain our ‘classic’ market. The last thing we want to do is alienate our market.”.

The developments will be in keeping with Chanel’s exclusive positioning, says Gilbert. Internal differences over how Chanel builds its brand while remaining true to its prestigious heritage partly contributed to Gilbert’s decision to leave the company.

In 1995, Calvin Klein decided to carve out the neglected youth market for itself with the launch of cKone – a unisex scent with deliberately non-glamorous, pared down advertising created by its own ad agency CRK. The following year the brand out-sold competing premium fragrances such as Chanel No 5, Yves Saint Laurent’s Opium and Estée Lauder’s Pleasures to became the leading brand on the market. It followed this with the May 1997 launch of sister fragrance cKbe.

Anne Gabarre, marketing director of French fashion house Givenchy, who previously worked as Chanel group brand manager for fragrance under Gilbert, says: “The newcomers have only been good for the market – cKone and cKbe have increased the market and introduced more people to fine fragrances.”

But she says the French houses, for whom scent began as an extra purchase for couture customers and has become the cash-cow supporting couture, will fight back.

“We, like all the other French fashion and fragrance houses, will try to push our fashion advantage,” Gabarre continues. “Our link to haute couture is what sets us apart from the US.

“Cosmetics will be used to assert our high fashion advantage while making the product desirable, completely in line with other French fashion houses. It is a reaction, it is a way of marking our ground.”

Although the launch of Chanel’s Allure in 1996 was aimed at younger consumers, it is cosmetics where Chanel has really started to grab the attention of young buyers.

Uma Thurman applied Chanel’s Rouge Noir nail varnish in the cult movie Pulp Fiction, creating a three-month waiting list for the product in the UK. Since then Chanel has launched metallic versions of Rouge Noir with red/black lipstick and mascara to match, and a blue varnish called Cosmique. This Christmas it will roll out sparkly varnish with an opalescent finish.

Gilbert says: “I was always a great believer in the idea that if you sell a 16-year-old a Chanel lipstick and she has the experience of her young life buying it you’ve got somebody who has gained entry to the Chanel club.

“It’s about trying to keep your consumers as a long-term investment. Through buying a nail varnish or a lipstick, they might one day buy a handbag or a suit.”

The publishing director of Cosmopolitan magazine Liz Kershaw says: “Everything about the word Chanel is what women aspire to and want. Chanel has got brand values that the others would die for. It is absolutely French and at the same time international.”

But a 1997 Mintel report on women’s fragrances shows a 30 per cent increase in brand share for cKone from 1995 to 1996 on sales worth 21m, compared with the 75-year-old Chanel No5’s six per cent growth in that time on sales of 16m.

Gilbert says the way forward for Chanel is not by discounting or giving away free products and gift bags: “My belief – and why Chanel and I have stayed together for so long – is that because everybody else is zigging you don’t have to zig with them as well. On the other hand it is an industry that relies enormously on innovation and creativity.”

In advertising terms Chanel is famed for its sumptuous creativity – with fashion director Karl Lagerfeld masterminding the advertising through DMB&B. Its ads for men’s fragrance L’Egoiste, which won the 1990 Palm D’Or at Cannes, and for Chanel No5 starring Marilyn Monroe, are said to epitomise Chanel’s brand values.

But one advertising industry insider says a new creative tack is called for: “Its advertising is fantastic, it’s beautiful, but it doesn’t reflect the way the other brands are going and Chanel has got to tap into youth.”

Team Saatchi chief executive Michael Parker says innovation counts for everything in luxury cosmetics and fragrances. A year ago he pitched for the Calvin Klein account and was told it wanted to be the first to create and use new ways of advertising the brand.

“The dilemma for Chanel is how does it take the most exclusive brand in the world and use it to enter a less exclusive market? You have to allow the real Chanel buyer to continue buying the premium product and not stretch the brand too far,” says Parker.

Chanel UK managing director Didier Sabas will need to act fast to find someone who can solve the marketing conundrum. It is understood he already has four candidates lined up for the job.

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