The House of Chanel (Chanel S.A.) originated in 1909, when Gabrielle Chanel opened a millinery shop at 160 Boulevard Malesherbes, the ground floor of the Parisian flat of the socialite and textile businessman Étienne Balsan, of whom she was mistress. Because the Balsan flat also was a salon for the French hunting and sporting élite, Chanel had opportunity to meet their demi-mondaine mistresses, who, as such, were women of fashion, upon whom the rich men displayed their wealth — as ornate clothes, jewelry, and hats.
Coco Chanel thus could sell to them the hats she designed and made; she thus earned a living, independent of her financial sponsor, the socialite Balsan. In the course of those salons Coco Chanel befriended Arthur ‘Boy’ Capel, an English socialite and polo player friend of Étienne Balsan; per the upper class social custom, Chanel also became mistress to Boy Capel. Despite that social circumstance, Boy Capel perceived the businesswoman innate to Coco Chanel, and, in 1910, financed her first independent millinery shop, Chanel Modes, at 31 rue Cambon, Paris. Because that locale already housed a dress shop, the business-lease limited Chanel to selling only millinery products, not couture. Two years later, in 1913, the Deauville and Biarritz couture shops of Coco Chanel offered for sale prêt-à-porter sports clothes for women, the practical designs of which allowed the wearer to play sport.
The First World War (1914–18) affected European fashion through scarcity of materials, and the mobilisation of women. By that time, Chanel had opened a large dress shop at 31 rue Cambon, near the Hôtel Ritz, in Paris; among the clothes for sale were flannel blazers, straight-line skirts of linen, sailor blouses, long sweaters made of jersey fabric, and skirt-and-jacket suits.
Coco Chanel used jersey cloth because of its physical properties as a garment, such as its drape — how it falls upon and falls from the body of the woman — and how well it adapted to a simple garment-design. Sartorially, some of Chanel’s designs derived from the military uniforms made prevalent by the War; and, by 1915, the designs and the clothes produced by the House of Chanel were known throughout France.
In 1915 and in 1917, Harper’s Bazaar magazine reported that the garments of the House of Chanel were “on the list of every buyer” for the clothing factories of Europe. The Chanel dress shop at 31 rue Cambon presented day-wear dress-and-coat ensembles of simple design, and black evening dresses trimmed with lace; and tulle-fabric dresses decorated with jet, a minor gemstone material.
After the First World War, the House of Chanel, following the fashion trends of the 1920s, produced beaded dresses, made especially popular by the Flapper woman. By 1920, Chanel had designed and presented a woman’s suit of clothes — composed either of two garments or of three garments — which allowed a woman to have a modern, feminine appearance, whilst being comfortable and practical to maintain; advocated as the “new uniform for afternoon and evening”, it became known as the Chanel Suit.
In 1921, to complement the suit of clothes, Coco Chanel commissioned the perfumer Ernest Beaux to create a perfume for the House of Chanel, his perfumes included the perfume No.5, named after the number of the sample Chanel liked best. Originally, a bottle of No. 5 de Chanel was a gift to clients of Chanel. The popularity of the perfume prompted the House of Chanel to offer it for retail sale in 1922.
In 1923, to explain the success of her clothes, Coco Chanel told Harper’s Bazaar magazine that design “simplicity is the keynote of all true elegance.”
Business partners — late 1920s The success of the No. 5 encouraged Coco Chanel to expand perfume sales beyond France and Europe, and to develop other perfumes — for which she required investment capital, business acumen, and access to the North American market. To that end, the businessman Théophile Bader (founder of Galeries Lafayette) introduced the venture capitalist Pierre Wertheimer to Coco Chanel. Their business deal established the Parfums Chanel company, a parfumerie of which Wertheimer owned 70 per cent, Bader owned 20 per cent, and Chanel owned 10 per cent; commercial success of the joint enterprise was assured by the Chanel name, and by the cachet of la “Maison Chanel”, which remained the sole business province of Coco Chanel.
Nonetheless, despite the success of the Chanel couture and parfumerie, the personal relations between Coco and her capitalist partner deteriorated, because, Coco said that Pierre Wertheimer was exploiting her talents as a fashion designer and as a businesswoman. Wertheimer reminded Chanel that he had made her a very rich woman; and that his venture capital had funded Chanel’s productive expansion of the parfumerie which created the wealth they enjoyed, all from the success of No. 5 de Chanel.
Nevertheless, unsatisfied, the businesswoman Gabrielle Chanel hired the attorney René de Chambrun to renegotiate the 10-per-cent partnership she entered, in 1924, with the Parfums Chanel company; the lawyer-to-lawyer negotiations failed, and the partnership-percentages remained as established in the original business deal among Wertheimer, Badel, and Chanel.