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How Chanel became a US$10 billion business under Karl Lagerfeld

Bloomberg • 5 min read
How Chanel became a US$10 billion business under Karl Lagerfeld
(Feb 20): When Karl Lagerfeld began creating clothes for Chanel in 1983, he inherited 70 years of fashion legacy. Yet Chanel was struggling as it searched for a new identity after the death of its founder left a vast void.
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(Feb 20): When Karl Lagerfeld began creating clothes for Chanel in 1983, he inherited 70 years of fashion legacy. Yet Chanel was struggling as it searched for a new identity after the death of its founder left a vast void.

Lagerfeld, who died Tuesday at 85, took the signature components left by Gabrielle Chanel, adapted them and inserted them into popular culture around the world. He married an institution to the caricature he molded for himself, with the dark shades and white ponytail ever present, and built on the myth forged by Coco.

It worked. Under Lagerfeld's auspices, Chanel grew from a cherished and influential name into a US$10 billion ($13.5 billion) global fashion machine, defining what it means to be a modern luxury label. Now that he’s gone, Chanel will have to find its identity once more. Owners Alain and Gérard Wertheimer have left it to Lagerfeld’s longtime collaborator, Virginie Viard, to figure out what’s next.

Lagerfeld joins Chanel in 1983

Karl Lagerfeld made his debut for Chanel in Paris in 1983, with a haute couture collection. The designer first moved to Paris with his mother in the 1950s, where he made his first steps in fashion at the houses of Balmain and later Jean Patou. He joined Chanel after stints at Balmain and Chloe. At the time, he called Chanel's image "static," so he looked further into the label's history for inspiration.

Photographer: Pierre Guillard/AFP via Getty Images


At Chanel, he managed to preserve Chanel’s image as the ultimate luxury, with tweed outfits or handbags costing many thousands of euros, while perfumes and nail polishes made the brand accessible to anyone. Given the intricate approach to making the outfits, Chanel sponsored and supported whole artisanal branches in France, from embroidery workshops to makers of tweed tassels to specialist cobblers.. At his first ready-to-wear show in 1984, Lagerfeld walked the runway with French model Ines de la Fressange.

Photographer: Pierre Guillaud/AFP via Getty Images

The interlocking Cs

Gabrielle Chanel's interlocking C logo, designed in the 1930s, was used in myriad ways with Lagerfeld in charge of design, from necktie prints to handbag clasps like this one shown at Paris Fashion Week on in September 2014.

Photographer: Pascal Le Segretain/Getty Images

Runway revival

Lagerfeld's over-the-top attention-seeking attitude helped re-imagine what fashion should could be– a theatrical presentation, rather than a pragmatic way to show buyers what they should place orders for this season. It took six months to make the flowers for his 2015 Haute Couture Spring-Summer show.

Photographer: Patrick Kovarik/AFP via Getty Images

Looking for muses

The designer was fond of "muses," the men and women who'd inspire his creative vision. Here, Claudia Schiffer, Kate Moss and Virginie Ledoyen joined Lagerfeld for Chanel's Fall-Winter 2009-2010 ready-to-wear show in Paris.

Photographer: Serge Benhamoub/Gamma-Rapho/Getty Images

A pop culture caricature

Lagerfeld inserted himself in a pop culture by creating a character for himself, with an instantly recognizable look that he maintained over the years: powdered white hair bound in a pony tail, dark sunglasses and his Hilditch & Key shirts with an almost comically high, stiff collar. Fingerless leather gloves and hands dripping in rings complemented the outfit. His verbal flourishes and take-no-prisoner views were also the stuff of legend, typically delivered in the hypnotic rapid-fire intonation of a livestock auctioneer.

Photographer: Bertrand Rindoff Petroff/Getty Images

On the red carpet

Chanel is best-known for handbags and perfume, but Lagerfeld would make sure its clothes would always be front-and-center at marquee cultural events such as the Academy Awards. He'd look to create fashion moments, like Julianne Moore's arrival at the 2015 Oscars.

Photographer: Kevin Mazur/WireImage/Getty Images

The final show

Lagerfeld's last show for Chanel was his 2019 Spring-Summer Haute Couture collection in January. The Grand Palais in Paris was refashioned into a summer getaway, complete with swimming pool and villa. He did not appear on the set to take a bow at the end of the show, as is customary, this time. Instead, his fashion director Virginie Viard came out for the traditional greeting.

Photographer: Anne-Christine Poujoulat/AFP via Getty Images

Fueled by China

China became a major sales driver for Chanel with Lagerfeld running creative. Last year, sales rose 11 percent on a constant-currency basis, spurred by shoppers in Asia. Chanel showed its Resort 2018 Collection Chengdu city, China, in 2017, looking to court more customers in the crucial market.

Photographer: Chen yichuan/Imaginechina/AP Photo

Chanel's new era

Chanel announced Tuesday that Virginie Viard, Lagerfeld's longtime collaborator, will succeed him as creative chief of Chanel, one of the most coveted positions in the fashion industry. The company said she's been entrusted with this task "so that the legacy of Gabrielle Chanel and Karl Lagerfeld can live on."

Photographer: Bertrand Rindoff Petroff/French Select/Getty Images

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