Chanel is one of the most successful, long-standing, and recognizable companies in the fashion industry. It was first established in 1909 by Gabrielle Bonheur Chanel, and as of 2018, it has grown into a 10 billion-dollar company. The brand’s signature items throughout their history include the women’s Chanel Suit, the Chanel No. 5 fragrance, and the staple item in every girl’s closet: the “Little Black Dress” (yep, this go-to garment in your closet started with Chanel). I dove deep into the Chanel legacy and was interested to learn that the very early years of Chanel employed multiple modern business principles used today:

1. Improve an existing product to address an unmet need.

From the beginning, Chanel was very cognizant of garment functionality and how women’s fashion needed to be improved to suit women’s needs. Her first niche became women’s hats: a fashion necessity predominantly worn to the horse races, the high-class pastime of the era. Before Chanel, most women’s hats were uncomfortable and impractical because they were too large and not easily secured to the heads of the women who wore them.

Innovation was in motion and Chanel made her fashion debut by opening a millinery shop to sell her new-and-improved women’s hats. Her hats were smaller, stayed fastened to the heads of women who wore them, and they were suitable to wear everywhere – not just at the horse races. This high-class need had just been satisfied with a Chanel solution!

First portrait of Chanel wearing one of her hats. Four Modern Business Principles by Coco Chanel.

Photo: First portrait of Gabrielle Chanel with one of her own hats published in the theatre magazine ‘Comoedia Illustre’, 1st October 1910. Comoedia Illustre 1910 Photo Felix.

2. Don’t sell a product – sell your brand’s personality.

Chanel made sure that every woman to encounter her brand knew that her clothing was the most opulent, sensible and effortlessly elegant in France. If a garment was a Chanel item, she made sure that everybody knew it. One of the ways she took to building trust with her clients was through her marketing strategy, which resembled that of what is seen in influencer marketing today.

Chanel would have her aunt and sister walk the streets of Paris wearing Chanel pieces and, nearly every day, women would ask where they bought such fashionable clothing. The high-class and poised aura of her aunt and sister embodied Chanel’s brand personality: sophisticated and effortless fashion. Their secret to great success was behaving as if they were not desperately trying to sell something.

Chanel’s brand personality overtook affluent social circles when French actor, Gabrielle Dorziat, was seen proudly wearing a Chanel hat as a fashion accessory in 1912. The influence offered by celebrity endorsement grew Chanel’s cultural relevance, and Chanel apparel began selling itself simply because it adorned the Chanel name. This is exactly vintage influencer marketing!

Gabrielle Dorziat wearing a Chanel Hat. Four Modern Business Principles by Coco Chanel.

Photo: Mlle Gabrielle Dorziat wearing one of Chanel’s first hats, in Les Modes, nr. 137, May 1912. Erfhoedbibliotheek Hendrik Consience, Antwerp, catalogue nr. B 38257

3. Do more with less to decrease costs and increase revenues.

Running a business throughout World War I carried its own challenges. Today, Chanel might have struggled to select the perfect fabric out of many options. But in 1914, Chanel was forced to be creative due to the scarcity of materials. General materials manufacturing strictly supported the war efforts so, in the world of clothing manufacturing, this made a particular fabric very abundant and economic: jersey cotton.

There were two downsides to jersey cotton:

  1. Jersey cotton was worn as men’s undergarments and sporting attire, so marketing a high-fashion women’s garment made of jersey cotton was risky.
  2. Jersey cotton was considered a lower quality fabric, so using it to maintain the high-profile status of the Chanel brand would be challenging.

The upside to jersey cotton was that it was cheap, so Chanel vehemently experimented with production and marketing to glamorize the material. The stretch and flexibility of jersey cotton allowed women to move more freely compared to the rigid, structured bodices that were predominant in fashion at the time. Chanel’s jersey cotton pieces were comfortable and elegant making the garments appropriate for a number of activities including general errand-running, attending social gatherings, and participating in sporting events (Hint: this is another example of selling a solution to a problem discussed in business principle #1). During the first world war era, Chanel was able to turn a profit on every item she sold by virtue of her innovative approach combined with the economy and abundance of jersey cotton.

“I cut jerseys for them from the sweaters that the stable lads wore and from the knitted training garments that I wore myself. By the end of the first summer of the war, I had earned 200,000 gold franks.”

Coco Chanel

4. Be focused, steadfast, and undistracted.

The foundation of Coco Chanel’s success was her relentless, fixated ambition. Chanel believed that the only necessity she lacked to start her fashion legacy was a strong, pre-requisite financial beginning. She satisfied this pre-requisite by collecting business loans from her male socialite friends and acquaintances, of whom not all shared her vision. Reportedly, some of them regarded Chanel’s early success to be fleeting and short-lived. When asked about this stage in her career, Chanel said:

“They had decided to give me a place where I could make my hats. The way they would have given me a toy thinking ‘let’s let her amuse herself’.”

Coco Chanel

It didn’t matter to Chanel that her lenders did not share her vision. She sensed that she was on to something big so she remained steadfast in her aspirations no matter the discouragement or lack of confidence from others.

“In order to be irreplaceable, one must be always different.”

Coco Chanel

Want to do your own deep dive? Start with the sources I used: