Chanel is Coming to London: The Parisian Brand is Moving Operations to London Whilst Companies Plan to Leave the UK - By Sol Azcune
In a turn of events, the iconic Parisian brand is moving operations to London whilst companies plan to leave UK for Paris post-Brexit.
Chanel has decided to simplify its structure by moving its global corporate operations to a single location, London. Currently, Chanel’s international operations, such as financial, legal and accounting, are spread across the globe, although most take place in New York, the city which serves as the brand’s global headquarters. Commenting on the brand’s decision to move across the pond, Chanel’s spokesperson said that “We wanted to simplify the structure of our business and London is the appropriate place to do that for an international company. London is the most central location to our markets, uses the English language and has strong corporate governance standards with its regulatory and legal requirements.”
The brand’s decision is also likely to be based on London’s encouraging conditions, such as large talent pool, favourable taxation and easy access to mainland Europe. Indeed, these have also attracted some of Chanel’s top competitors, such as the LVMH group, which includes brands like Givenchy, Dior Louis Vuitton, as well as Kering, home to Gucci Saint Laurent, Balenciaga and more, to move executive operations to London. Chanel’s relocation also reaffirms the city’s growing international reputation as a fashion central, a matter that has been of much discussion lately with Mayor Sadiq Kahn pledging almost £2 million to East London’s fashion hub.
Nonetheless, the move still comes as a surprise in the face of a Brexit-fuelled lack of confidence in the UK’s economy. With a large number of companies, including JP Morgan, Citigroup and Bank of America relocating bases to Paris it seems rather paradoxical that the French brand has chosen London as its new home. Although it is important to note that only about 50 jobs out of the 22,000 Chanel employs around the world, are coming to the UK, the brand’s move to the UK, shows a vote of confidence in post-Brexit Britain. Chanel is not only admired for its iconic designs, but for its business success, in 2017 alone the brand U$SD 10 billion in sales. As such, it is no surprise that the news was well received at Downing Street, the prime minister herself said she was “delighted to hear that Chanel, the grand dame of fashion, is moving its corporate headquarters here.”
Chanel’s decision is especially newsworthy in the retail market, which has suffered from a large blow since the referendum. The market has experienced decline in revenue as consequence of the reluctance to spend by the British customer in these uncertain times as well as the sterling’s devaluation, which increased import costs, thus forcing businesses to either increase their prices or absorb more cost. For fashion houses this worry has been furthered with the lack of clarity about what is come, for instance designer Emilio de la Morena spoke to BoF on the matter, he said “I buy all my fabrics, apart from a few wools, in Italy and France mainly, and I’m worried about how that is going to affect our prices. How are we going to be competitive?”. Similarly, Christian Murphy, the founder of manufacturing firm Albion Knitting Company, who sells to brands Chloé and Gucci, also spoke to BoF about his concerns, commenting that, ”potentially, we could end up losing a third of our workforce… As a manufacturer and as an employer, it’s something you have to wonder about.” Additionally, designers experience uncertainty in matters of legal protection, as European Union intellectual protection laws will no longer be in effect in the UK. Chanel’s relocation will not solve problems for local fashion houses, which will still have to deal with the challenges that come as Britain goes ahead with Brexit, however, it may help instil confidence in these troubled economic times.