Tsar Karl: Lagerfeld's Russian dolls

Lagerfeld picked a Russian theme for his show last week, reflecting Chanel's historic connection with Moscow – where sales of his luxurious clothes are booming. Carola Long reports from Paris

Sparkling white Christmas trees might have been the closest thing to a Russian winter in the streets of Paris, but inside the city's Théâtre Ranelagh last week, Karl Lagerfeld paid his own tribute to the theme. Mufflers with the double "C" logo and white snow-queen knitwear glittering with crystals as if flecked with snow and bathed in moonlight, created a decidedly Russian flight of fantasy.

This was Chanel's seventh Métiers d'Art show since the collection was established in 2002, and it looked to Moscow – the capital of a country that captivated and influenced Gabrielle Chanel. The collection was formed to protect and showcase the work of the couture ateliers – such as the legendary embroiderers Lesage and the hat-makers Michel – that Chanel began to acquire in 2002. Every year, Lagerfeld has dedicated the collection to a different city – such as Paris, New York and Monte Carlo. Last year's event – "Paris-Londres" – marked the first time that Chanel has staged a major show in the capital, and it drew on Coco Chanel's relationship with Arthur "Boy" Capel, who was raised at an English boarding school, and the Duke of Westminster, who introduced her to "English chic".

Chanel had numerous connections with Russia, one of the most significant of which, unsurprisingly given her lively romantic history, was with a Russian lover, the Grand Duke Dimitri Pavlovich. He introduced Chanel to the splendour of the Tsars, and to the embroidery skills of his sister, the Grand Duchess Marie Pavlovna. Intrigued by Chanel, the Grand Duchess would spend time in her studio, and in 1921, after witnessing an argument between Chanel and her embroiderer over the latter's prices, she offered her own services. She changed her name, bought an embroidery machine and hired young Russian women to help her create traditional Russian designs, trompe l'oeil jewellery, and images inspired by oriental rugs and Persian tiles.

Chanel was also influenced by clothes from the Grand Duke's wardrobe – the tunic, the fur-lined coat and the rubachka, the long, embroidered blouse of traditional Russian costume – and he introduced her to the perfumer Ernest Beaux, who created Chanel No 5 in 1921 and Cuir de Russie in 1927.

Chanel also collaborated with several Russian artists, among them Igor Stravinsky, whose recreation of The Rite of Spring she financed in 1920, and Sergei Diaghilev, who founded the Ballets Russes. In 1924 she created the costumes for his premiere of the ballet Le Train bleu, which combined acrobatics, satire and pantomime.

Lagerfeld's talent is his ability to blend these elements of the Chanel legend, the company's signature black and white, tweed and pearls motifs, and his own desire to move its designs forward, then give the whole effect his own irreverent spin. While the explosion of Byzantine brilliance on the catwalks shows his creative enthusiasm for the Russian theme, Lagerfeld says, acerbically, "I don't call it a celebration, I needed a theme that was related to Chanel, I have heard so much about Russia, so why shouldn't I take Russia? Also, I like cold countries and I hate heat.

"They [the heads at Chanel] would love me to do something on China next. Perhaps China Express – the trip Chanel never made."

Presumably "they" would like Lagerfeld to host a Métiers d'Art collection in China because it's a fast-growing market – like Russia. Bruno Pavlovsky, president of fashion at Chanel acknowledges that "yes, Russia is a booming market, and this is a nice way to support it. Russian consumers know a lot about fashion – it's not a new market for fashion. They like something special and unique."

The collection was certainly all of the above, and more. Just under 200 guests, wearing mainly black and white, sat on the red-velvet seats of the old theatre-turned-cinema, and watched first a mock-silent movie about Chanel's social milieu (directed by Lagerfeld, and featuring cameos by his colleagues), then a show in which models strutted through a recreation of a Parisian nightclub in the 1920s, complete with red table lamps and marbled pillars. Of course, Lagerfeld showed versions of the house's classic skirt suit – in Russian red tweed edged with black; in black wool encrusted with gold, pearls and costume jewels clustered like faux-military decorations; and also in a severe shiny jersey with uniform-like pockets and red patent belts. The clothes evoked military uniforms – be they Tsarist, revolutionary or Cold War era – traditional court and folk dress, the angular shapes of constructivist art, and the Church. A long coat patterned with images of Red Square suggested the robes of an Orthodox priest; jewel-encrusted gold bags on chains brought to mind a swinging incense-burner; and shoes with bulb-shaped heels resembled upside-down church domes. Each outfit was accessorised with an exaggerated pearl-and-woven-hair take on the kokoshnik, the traditional Russian tiara, to create a feast of opulence.

It was certainly seductive, but is the time right for such extravagance? "I'm not sure," says Lagerfeld, "but the collection isn't in the shops until June, and thanks to Mr Obama, things may be OK. I'm not a marketing person, I don't ask myself questions, I do things by instinct."

Lagerfeld's instincts are pretty keen, and predictions as to how consumers will respond to the recession focus on two possible responses: investing in classics; and investing in special pieces, two areas in which Chanel excels. Pavlovsky agrees: "There is a downturn, but it's part of our strength to adapt. Here you have the perfect example of what is right for Chanel: luxury, creativity and fashion."