Crisis Management and Adaptation

The business challenges Chanel faced throughout her career revealed her capacity for crisis management and adaptation. The World War I period, which could have destroyed a young business, became an opportunity for expansion. The 1929 economic crisis, which bankrupted many luxury businesses, saw Chanel survive through diversification and careful cost management.

During World War I, Chanel adapted designs to use less fabric and fewer embellishments, positioning this as modernity rather than deprivation. She shifted production to items that could be made with available materials and required less skilled labor as workers were mobilized. The expansion to Biarritz provided a hedge against Paris uncertainties.

The Great Depression required different adaptations. Chanel reduced prices selectively while maintaining quality. She expanded the accessory business, understanding that women who couldn't afford new clothes might still purchase a handbag or perfume. Staff reductions were handled more carefully than at other houses, maintaining core capabilities while reducing costs.

The 1936 labor strikes presented a political as well as business crisis. Chanel's hardline response—refusing all union demands—risked both production disruption and reputational damage. Her ability to resume operations after the strikes, albeit with lingering resentments, showed tactical if not strategic success in crisis management.