The global luxury fashion brand Chanel opened a beauty and fragrance boutique Friday in Harbor East, its only Baltimore-area location.
The arrival of the century-old French fashion house is a good sign for the city, said JP Krahel, the chair of accounting at Loyola’s Sellinger School of Business.
“They’re not doing this for charity. They’re not doing it based on hope,” Krahel said. “They’re doing it based on solid evidence and market research.”
That means customers who can afford $45 lipstick and $165 perfume.
Chanel did not respond to a request for comment on the opening of its new store at 801 Aliceanna St. Perfume fragrance wafted onto the sidewalk Monday morning when a security guard held the door open for a trio of women.
Coming out of the pandemic, the luxury retail industry has been booming and expanding its physical footprint across the country. These brands — think Gucci, Louis Vuitton and Dior — have not only recovered from a pandemic slump, they’ve surpassed previous highs, hitting about $70 billion in total U.S. retail sales, according to a report by the commercial real estate firm JLL.
Even after a spike in ecommerce during the pandemic, online sales for luxury retail represent just 15% of total sales, the report said. As revenues rise, many of these brands are doubling down on brick-and-mortar locations.
Chanel recently opened a 30,000-square-foot flagship store on Rodeo Drive in Beverly Hills, the report said. Brands are also opening smaller, strategically curated stores, like the Chanel in Baltimore. The store is a single room with display cases and mirrors and lots of products to try.
Even though Chanel won’t be selling its $10,000 handbags at the store in Baltimore, having a Chanel store is significant, Krahel said.
“Boutique or not, it’s going to have that name out front and that’s what people driving past Harbor East are going to see,” Krahel said. “It’s not like opening a Chanel is going to solve all the city’s problems, but I think it’s a vote of confidence in the city’s economic future.”
Linda Loubert, an associate professor of economics at Morgan State University, said she’s not sure whether a new Chanel store is such a good thing for Baltimore. Luxury stores in upscale neighborhoods generate tax revenue, she said, but they can also deepen the economic divide among neighborhoods in an already segregated city.
Harbor East is part of a relatively affluent, predominantly white census tract — the smallest geography used by the U.S. Census — where most residents have college degrees and the median household income in 2021 was nearly $117,000.
Chanel ultimately cares about money, Loubert said, and the reason Chanel picked Harbor East is probably because computer models analyzed demographic data and determined a store would be profitable there. Companies are increasingly likely to pick new locations based on artificial intelligence and access to high-income earners, she said, regardless of where they are.
“It could be Manhattan, Kansas,” Loubert said.
Other retailers like Warby Parker, Bonobos and Abercrombie & Fitch have stores on the same block of Aliceanna Street.
Jeff Mason is the principal of Mason Retail Group, which handles retail leasing for Harbor East. Mason said Chanel approached his firm about two years ago. Plans for the store were announced earlier this year, and Mason is optimistic the luxury brand will help attract more customers — and more tenants — for Harbor East.
“It’s like building blocks. The better brands that you have, the more people that you draw,” Mason said. “Chanel is clearly a great building block for us.”
