1.

FRANCE:

The economy of France is highly developed and free-market oriented. It is the world’s 7th
largest economy by nominal GDP and the 3rd largest economy in the European Union after
Germany and United Kingdom. France has a diversified economy, the chemical industry is a
key sector for France, helping to develop other manufacturing activities contributing to
economic growth, as France is the most visited destination in the world. Paris the capital of
France is ranked as the most elegant city in the world, which propels the fashion industry.

1.2 FRANCE EXPORTS:

The total export by the country as per 2018 data was US$ 568.4 Billion of goods around the
globe. France is Europe’s second largest exporter and importer of goods. It also part of the
World Trade Organization, both as an individual country and as part of the EU.

Table 1: France export categories

Analysis:

France exports mainly transport equipment (23 percent of total exports), of which aeronautics
(12 percent) and automobile industry (10 percent). The country also exports mechanical
equipment, electronic and computer equipment (19 percent); chemicals, perfumes, cosmetics
(12 percent); agro-food industry products (10 percent); metallurgical and metal products (7
percent); pharmaceuticals (6 percent); textiles, leather (5 percent); rubber and plastic
products, miscellaneous mineral products (4 percent); jewelry, toys, furniture (3 percent); and
agricultural, forestry, fishery and aquaculture products (3 percent).

Table 2: France export countries

Analysis:

Main export partners are: Germany (15 percent of total exports), Spain and Italy and the US
(8 percent each), the UK and Belgium (7 percent each), China and the Netherlands (4 percent
each).
1.3 FRANCE IMPORTS:

France imported a total of US$ 659.4 Billion products in the year 2018 from various
countries worldwide.

Table 3: France import categories

Analysis:

France imports mainly mechanical equipment, electronic and computer equipment (21
percent of total imports); transport equipment (19 percent), of which aeronautics (11 percent)
and automobile industry (7 percent); chemicals, perfumes, cosmetics (8 percent); agro-food
industry products (8 percent); metallurgical and metal products (7 percent); natural
hydrocarbons, other mining products, electricity (7 percent); textiles, leather (7 percent);
jewelry, toys, furniture (5 percent); pharmaceuticals (5 percent); and rubber and plastic
products, miscellaneous mineral products (5 percent).
 Table 4: France import countries

Analysis:

Main import partners are: Germany (16 percent of total imports), China (9 percent), Italy (7.6
percent), Belgium (7 percent), the US and Spain (6 percent each), the UK and the
Netherlands (4.6 and 3.7 percent each).

2. LUXURY GOODS:

The global luxury goods industry, which includes drinks, fashion, cosmetics,
fragrances, watches, jewellery, luggage and handbags, has been on an upward climb for many
years. Although the technical term 'luxury good' is independent of the goods' quality, they are
generally considered to be goods at the highest end of the market in terms of quality and
price. Luxury goods manufacturers meet consumer demand by focusing on brand, aesthetics,
quality materials, superior craftsmanship and pricing to transform everyday objects into status
symbols. The industry rises and falls with the gross domestic product (GDP), seeing demand
climb in times of economic stability and plummeting in unfavourable economic climates. The
United States has long been the largest regional market for luxury goods and it was estimated
to continue to be the leading personal luxury goods market in 2018, with a value of 71 billion
Euros.

The top 5 countries with luxury fashion goods are:

 USA
 China
 Japan
 France
 United Kingdom

Figure 1: Top 5 countries dealing in luxury products worldwide

LVMH (Louis Vuitton Moet Hennessy) was the most valuable luxury brand in the world,
with a brand value of about 47.2 billion U.S. dollars as of 2019. The LVMH Group's total
revenue for the 2018 fiscal year was about 46.8 billion Euros. Moët Hennessy Louis Vuitton,
more commonly referred to as LVMH Group, is a French luxury goods conglomerate. The
company is primarily known for its fashion house, known as Louis Vuitton, named after its
founder. The conglomerate operates globally, selling luxury leather goods, handbags, ready-
to-wear fashion, and other fashion accessories. Since 1989, the company has been run by
Frenchman Bernard Arnault, following the merger of the luxury goods producer with
champagne producer Moët & Chandon and cognac manufacturer Hennessy.

Figure 2: Top luxury brands with their market shares worldwide

New markets and segments are giving the industry growth points. One challenge for luxury
companies is to maintain brand equity and cultivate their customer relationships. As luxury
expands into more industries, expect a more mature segmented market. As a result,
consumers should also become more rational.

3. FRENCH FASHION:

Fashion in France is an important aspect in the spectrum of culture and social life, as well as
being an important aspect of the economy. Fashion design and production is from
prominence in France from the 15th century and from the 17th it exploded into a rich industry
both for local consumption and for exports. Both the terms haute couture and prêt-a-porter
were born in France and the art of fashion and garment making process were started here.
Paris acts as the center of the fashion industry and holds the name of global fashion capital.
The city is home to many prime designers, including:

 Chanel
 Louis Vuitton
 Givenchy
 Balmain
 Louboutin
 Pierre Cardin
 Yves Saint Laurent
 Roger Vivier
 Dior
 Jean Paul Gaultier
 Hermès
 Lanvin
 Chloé and
 Céline

4. CHANEL:

4.1 BRAND HISTORY:

Chanel is a French privately held company owned by Alain and Gerard Wertheimer who
were early business partners of the couturiere, Coco Chanel. Chanel is a luxury brand that has
its focus on in high fashion and ready-made clothes, luxury products and accessories. The
company began in the year 1909 and has been in existence since 110 years. The headquarters
of the company are at Neuilly-sur-Seine, France, London and United Kingdom. The brand
has a total of 310 stores around the world. The company has registered revenue of $11 billion
as of 2018. They have a total of twenty thousand employees working for them. The company
is well-known for the perfume No.5 de Chanel and Chanel suit.

4.2 COCO CHANEL:

Gabrielle Bonheur Coco Chanel was born on 19th August 1883 and was a French fashion
designer. She is the founder of the Chanel brand, and was credited with the post-World war I
era for liberating women from the traditional ‘corseted silhouette’ and popularizing a sporty,
casual chic. Women started wearing cardigans and pants which was reserved for men only at
that time. She wanted to free the women and yet make them feel comfortable. She is very
famous for her timeless designs, trademark suits, the little black dress and Chanel No.5. She
is a true epitome of creativity and is a self-made woman.

Chanel was raised in an orphanage and was taught how to sew. She was a singer before she
opened her first clothes shop in 1910. She was also known for introducing the concept of
using jersey fabric. People started wearing black not only to funerals but as fashion. She is
the only fashion designer who features on Times magazine’s list of the 100 most influential
people of the 20th century. She has made history and will live forever.
4.3 PRODUCT PROFILE:

The company has three major categories that they cater to which are the following:

4.3.1 Fashion:
4.3.2 Fragrances and Beauty:

4.3.3 Watch and Jewellery:

4.4 BRAND POSITION:

The brand Chanel has positioned it as a “timeless elegance and liberated femininity
brand”. The brand’s strategy revolves around the highest quality, luxury, French origin and
heritage dating back to 1909. Chanel accentuates the timeless modernity and promotes the
concept of “uncomplicated luxury” valuing simplicity over opulence. Chanel’s heritage and
brand equity are built around the company’s founder, Coco Chanel and her long lasting
legacy. Coco Chanel never followed any established fashion rules, which allowed her to
revolutionize the fashion world and free women from certain fashion constraints. She was a
feminist and wanted to dress independent women. To this day, freedom is one of the
Chanel’s key values, which the brand executes not only in its artistic style but also in the
social causes it supports.

4.5 COMPETITOR ANALYSIS:

4.5.1 LOUIS VUITTON:

Louis Vuitton is a well-known French fashion that was established during the year 1854 and
is headquartered in Paris, France. The company produces various products like leather goods,
shoes, ready-to-wear, jewelry, watches, sunglasses, accessories, and books.

It is the world’s leading fashion house and sells their products through department stores,
standalone boutiques, and through online. It has a brand value of $28.4 billion. The company
creates and sells multiple products for men and women. The company has its
business operations in almost 50 countries. The company’s product has been a benchmark in
quality and design.
All the products have a symbol of LV and it carries great brand image which
many people would love to carry the company’s products. The company has the top designers
as part of their design team. As this brand has a strong association with quality, Louis Vuitton
is considered a top Chanel competitor.

4.5.2 HERMES:

A Fashion industry, Hermes International was founded during the year 1837and is
headquartered in Paris, France. The company is specialized in lifestyle accessories,
perfumery, leather, home furnishings, watches, jewelry, and ready-to-wear. The company
transforms the fashion world to great heights. There is a wide range of specialized companies
under this brand.

The company operates a retail supply chain, supply comprehensive logistics to meet the
global demands. The company provides a fully dedicated service to their clients. The
company focuses on diverse products to cater to the requirements of people. The company
adopts the premium pricing policy to imbibe the uniqueness of the requirement of a luxury
consumer.

The company charges high for their products that meet the requirements of
the target markets to achieve profits. The company has its business operations globally. It
distributes its products through 307 stores worldwide and through online. Due to their great
products and services, Hermes is considered one of the top Chanel competitors.
4.5.3 GUCCI:

Also a top Chanel competitor, Gucci is an Italian Fashion industry that was established
during the year 1921 and is headquartered in Florence, Italy. The company is an Italian brand
focusing on fashion and leather goods.

The company operates about 278 stores worldwide. Their products are also wholesaled
through franchises and many upscale department stores. As on today, this brand is one of the
best-established brands in the fashion industry. Gucci is a multi-branded company and has a
strong international exposure.

It deals with the client through direct operating stores scheme. The company has an excellent
service for their qualitative products. The management has a great sense in the fashion world
and has a tap on the existing fashion trend.

The company designs clothes and other accessories. Each and every product has a unique
feature and has excellent quality. The designs of the products are innovative and use
of technology for their design has made the finished products attractive. Due to their great
design in their product, Gucci is considered one of the top Chanel competitors.

4.6 SWOT ANALYSIS:

STRENGTHS:

 Strong Brand portfolio: Chanel has invested in building a strong brand portfolio, it has
diversified into various product categories like garments, fragrances, watches, jewellery
 etc. It offers wide variety of products and is also present in various countries with 300
stores.

 Innovation: The brand is known for its creativity and its ability of coming up with latest
designs and ideas which are innovative. The company is also known for its style of
providing comfortable and functional clothes with perfect blends of styles. Classic and
timeless designs make a major part of their collection.

 Prêt-a-porter: The brand is a pioneer for beginning prêt-a-porter or known as “ready-to-

wear” in English.

 Skilled workforce: The brand has a highly skilled workforce through successful training
and learning programs. Chanel is investing huge resources in training and development of
its employees resulting in a workforce that is not only highly skilled but also motivated to
achieve more.

 High level of customer satisfaction: The company with its dedicated customer
relationship management department has able to achieve a high level of customer
satisfaction among present customers and good brand equity among the potential
customers.

 Reliable suppliers: It has a strong base of reliable supplier of raw material thus enabling
the company to overcome any supply chain bottlenecks.

WEAKNESS:

 Too much competition: Chanel is competing with many other premium brands which
means limited market growth. It is competing with Louis Vuitton, Dior, Prada, Gucci,
Versace, Hermès and H&M. Being a premium segment gives a very little room for
expansion. The segment is almost saturated.
 Need more investment in new technologies: Given the scale of expansion and different
geographies the company is planning to expand into, Chanel needs to put more money in
technology to integrate the processes across the board. Right now the investment in
technologies is not at par with the vision of the company.

 Rented Property: A significant proportion of the property that Chanel owns is rented
rather than purchased. It has to pay large amounts of rent on these adding to its costs.

 Centralized decision making: Decisions by teams need to be approved by certain

officials. This reduces efficiency in operations by making them more time consuming. It
also leads to reduced innovation.

OPPORTUNITIES:

 Internet: There has been an increase in the number of internet users all over the world.
This means that there is an opportunity for Chanel to expand their presence online, by
using the internet to interact with its customers.

 E-commerce: Also, there has been a new trend and a growth in sales of the e-commerce
industry. This means that a lot of people are now making purchases online. Chanel can
earn revenue by opening online stores and making sales through these.

 Social Media: An increase in the number of social media users worldwide. The three
social media platforms like Facebook, Twitter and Instagram have shown the greatest
number of increase in monthly active users. Chanel can use social media to promote its
products, interact with customers and collect feedback from them.

 Transport industry: The transport industry, has been flourishing in the past few years,
and shows growth potential in the future. This has reduced the costs of transportation,
which is beneficial for Chanel as it will lower its overall costs.

 New acquisitions: Chanel can look forward towards new mergers and acquisitions such
that it can increase its premium markets as well as move towards a lesser premium
category working on increasing their market share and sales.
 New products and services: Chanel can start working on some new products. Its said
that Chanel is a brand of a young generation. They can work on changing that if they
study what the demography wants and then build the relevant products.

THREATS:

 Competition: Huge competition exists in this category. Their main competitors are Louis
Vuitton, Dior, Prada, Gucci, Versace, Hermès and H&M. There is a very little scope for
market growth in this segment being a niche category.

 Counterfeits: Luxury brands get copied a lot and there’s little a brand can do to tackle
this problem. This is a very prevalent problem which hampers the sales of the brand.

 Copying: There are many brands that copy the style and elegance of Chanel and the
luxury brands and sell the copied product at much cheaper and affordable rates. This also
results and affects the brand negatively.

4.7 MARKET SHARE:

4.8 INFLUENCES:

Coco Chanel greatly influenced women's fashion. Specifically, she influenced women and
men. Women now had more freedom in what they were supposed to wear; they could dress
how they wanted. Her fashion also helped the creation of other fashion, she inspired others to
not only expand on the fashion of the time but to continue to evolve fashion. Coco Chanel
made it so menswear could also be worn as womenswear, this was a huge step because it
helped show how women and men were equal. She freed the ankles, loosened the waistline,
allowed women to be able to cut their hair, and she just gave them so much freedom to do so
Muchmore.

She influenced men due to the fact that she proved women were capable of more than just
being housewives. They could work and do just as much as men, they just hadn't been given
the opportunity. I think that while Chanel didn't change how men thought about women, she
opened their eyes to a new point of view.

4.9 COMPETITIVENESS:

 Chanel is known for its classic and timeless designs with high quality products
 Historical brand culture
 Advertising in almost every fashion magazine is key to what helps keep Chanel alive
 Each consultant working in a Chanel boutique has had previous training in Paris to learn
the history of the brand
 Products are treated like an investment so that the value for them does not decrease

5. SUPPLY CHAIN MANAGEMENT:

PROCUREMENT OF RAW MATERIALS:

The company has a trend of always procuring high-end raw materials and given the number
of raw materials they source and also the number of suppliers they source them from
becomes very challenging for them.
 SUPPLIERS:

The supply base of Chanel consists of more than 3000 suppliers around the world, split
between the term “direct procurement” which includes finished goods, components and raw
materials. The other term “indirect procurement” refers to the sales, promotional and
marketing materials and shopping bags and displays.

The fashion activity has over 1400 supply chain partners, out of which 69% is the supply for
finished goods and the majority of which are based in Europe (France and Italy).

The fragrances and beauty activity have over 900 suppliers, 69% of which provide them the
raw materials, 27% supply natural raw materials of strategic importance for the brand and
they have direct access to the origin of such materials.

The watches and fine jewellery have 34 suppliers, supplying gold, diamonds, other precious
stones.

MANUFACTURING:

From the beginning the company has been a manufacturing company and most of their
finished products are assembled in factories that are owned by the company or controlled by
the company, which are mostly in France, Italy and Switzerland. These factories have a large
network of raw materials, product components and nonsalable promotional materials. They
follow three diligence approaches:

i. Clear policies and guidance governing the supplier relationship:

The company has this policy of working with the suppliers according to the responsible-
sourcing policy. This policy includes all the international obligations and principles from
the United Nations and ILO, which relates to issues regarding labour, human rights,
environment, and anticorruption. The company provides guidance on applying the policy
through annual supplier meetings and through support from trained professionals on their
procurement teams.

ii. Rigorous processes to assess and remediate human rights risks and impacts:
 First, the procurement team assesses all the suppliers according to the criteria covering
the business relationship, social and environmental issues associated with the value-
adding activity undertaken by the supplier, and potential reputational risks of the brand.

Second, to understand better supplier management of social and environmental risks they
ask the suppliers to assess themselves using their online standard, which was developed
by the company in the year 2011 itself.

iii. Performance monitoring and compliance auditing, as well as ongoing dialogue,

engagement and improvement:

To continuously monitor the performance of their suppliers they have created a

responsible-sourcing expert team at the corporate level. It’s the company’s mission to
define and update their responsible sourcing guidelines and to ensure coherence in
implementing these strategies. The sustainability excellence program (SEP) audit
committee ensure that the audit results are monitored they have five internal and ten
external trained and certified auditors devoted to implementing their sourcing policy.

Chanel continues to manufacture in France when it comes to ready-to-wear r haute couture

collections, but they have also expanded to other common manufacturing areas such as Italy
and Spain for their jewellery manufacturing.

Most of Chanel’s accessories are made in Italy. This area is known for their skilled
craftsmen, especially dealing in Leather. Chanel purses are made in both France and Italy and
sometimes even in Spain. These shops have their own artisans using fine machines to thread
and quilt through the leather, yet they are hand cutting and molding the pieces to fit to
perfection. They use both handmade aspects combined with precision machines that are
carefully watched.

DISTRIBUTION:

Chanel distributes its offerings through various channels such as exclusive stores, e-
commerce websites, multi-brand stores, flagship stores, boutique, high-end super markets and
duty-free store so as to make the products available worldwide. Chanel stores operate in
nearly 310 boutiques worldwide with:

 Six in Oceania
 Two in South America
 One hundred and twenty eight in North America
 Ninety-four in Asia
 Ten in the Middle East and
 Seventy in Europe

As the consumers of the brand belong to upper classes and are affluent customers, the stores
are located at high-end areas of the world’s capital cities for example, Rue de Fauborg St.
Honore in Paris and the famous Fifth Avenue in New York. Several stores are located in
famous airports to target the travellers.

Chanel not only offers licenses for the licensee, but also provides franchises for a very limited
number of countries. Chanel reached a revenue of $9.6 billion in 2017, which is generated by
the wholesale channel and is putting more effort into direct retail.

5.1 NETWORK:
5.2 DESTINATION OF SUPPLY:
5.3 SELECTION PROCESS:
5.4 COMPLIANCE:
REFERENCES:

https://oec.world/en/profile/country/fra/

https://tradingeconomics.com/france/imports

https://topforeignstocks.com/2016/04/25/export-and-import-partners-of-france/

http://www.worldstopexports.com/frances-top-10-exports/

https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf

https://wits.worldbank.org/CountryProfile/en/Country/FRA/Year/LTST/TradeFlow/EXPIMP

https://import-export.societegenerale.fr/en/country/france/presentation-
trade#classification_by_products

https://www.cnbc.com/2018/10/04/the-luxury-sector-is-growing-faster-than-many-others-and-
gucci-leads.html