Chanel was officially launched in 1910 by Gabrielle “Coco” Chanel. She opened her first boutique, Chanel Modes, in Paris at 21 Rue Cambon, initially focusing on hats. Her designs quickly gained popularity, and by 1915, Chanel had expanded into fashion, offering ready-to-wear clothing and introducing her signature styles, which revolutionized women’s fashion with a focus on simplicity, comfort, and exquisite elegance.
Chanel was the first luxury fashion brand to produce perfume and makeup alongside haute couture. In 1921, Chanel launched Chanel No. 5, created by Coco Chanel and perfumer Ernest Beaux. This iconic fragrance marked one of the earliest moves by a luxury fashion house into the beauty industry and established a precedent for future brands.
Shortly afterward, in 1924, Chanel expanded further into cosmetics by releasing a line of makeup products, including face powder and lipstick. This dual move into perfume and makeup made Chanel the ultimate pioneer in integrating beauty products with high fashion, a strategy that many luxury fashion brands would eventually soon follow.
While many luxurious fashion brands have not expanded their business to include makeup besides fashion, like, Fendi, Bottega Veneta, Balmain, Balenciaga, Celine, and Ralph Lauren, to name a few, they all however extended their business into perfumeries at different times shortly after.
Well, it is no secret that the luxury fashion brands’ makeup and perfumeries industry has indeed proven to be a lucrative move. Luxury fashion brands have been increasingly earning billions from this sector, and here’s why:
1. Expansion of Brand Appeal
Make-up and beauty products allow luxury brands to reach a broader audience. While not everyone can afford a designer handbag or couture gown, many can indulge in a luxury lipstick or fragrance, providing an “affordable luxury” experience that aligns with the brand’s allure. This creates a more inclusive brand identity and builds aspirational connections with younger and emerging customers.
2. Capitalizing Brand Prestige
These brands already embody luxury, quality, and style, which transition well into beauty. Consumers trust the high standards and exclusive allure associated with these names, making them more willing to pay premium prices for makeup, skincare, and fragrances. Makes sense?
3. High-Profit Margins
Luxury beauty products, especially fragrance and makeup, come with high-profit margins. The cost of production is relatively low compared to fashion items, but the high demand and brand prestige allow for significant markup. This combination is profitable and makes beauty a cornerstone in the revenue streams of many luxury brands.
4. Diversification and Revenue Stability
The luxury fashion market can be seasonal and dependent on trends, while beauty products, especially fragrances and skincare, have a more stable demand year-round. Expanding into beauty helps diversify revenue, providing a steady cash flow that complements the more variable fashion cycles.
5. Increased Brand Loyalty
Makeup and skincare are daily-use items, meaning consumers engage with the brand every day, building deeper loyalty. When customers feel connected to a brand through everyday products, they are more likely to consider purchasing higher-end fashion items in the future, reinforcing a lifetime value approach.
Is it Good Business?
Of course, it is! Luxury beauty is incredibly profitable and has grown into a robust segment for many of these brands. Luxury brands’ beauty divisions often outperform their fashion divisions in terms of sales volume, and the beauty industry’s consistent growth ensures a valuable revenue stream. For instance, Dior’s beauty division contributes significantly to its revenue, and Chanel’s No. 5 fragrance is still unbeatably iconic worldwide.
The move into makeup and beauty allows luxury brands to stay relevant, and visible, expand their influence, and secure a larger share of consumer spending across different demographics, solidifying their legacy in both the fashion and beauty industries.
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