Young Koreans line up to buy luxury goods, despite rising prices.
Dozens of people lined up early in front of Chanel stores at Shinsegae and Lotte department stores in Seoul in the minus 13 degrees Celsius weather on January 16. Follow Allkpop, many people set up tents, brought mattresses and sleeping bags to avoid the cold from the night before, waiting for the store to open to buy the products before they ran out of stock.
Follow Korea Times, this scene has become familiar since the outbreak in Korea in February 2020. Research firm Euromonitor reported that South Korea’s luxury goods consumption market grew by $14.1 billion (4.6 percent), of which 50 percent of customers are in their 20s and 30s.
Experts attribute the high consumption of luxury goods to Covid-19. Lee Eun Hee – a professor at Inha University – said that the pandemic that has persisted for nearly two years has made it impossible for many people to travel abroad or spend money at luxury restaurants. Instead, they relieve their inhibitions by shopping for luxury goods. “They’re happy to buy them because they see it as a profitable investment,” Lee Eun Hee said above Korea Times. Follow VogueSince 1990, the Medium Classic Flap bag has grown from $1,150 to $8,800.
Above Korea Times, Yoo Hyun Jung – a professor of consumer science at Chungbuk National University – said: “Today’s younger generation no longer thinks that luxury goods can’t be bought. They are willing to save a few months to buy it.” According to professor Kwak Keum Joo of Seoul National University, Korean youth’s thirst for luxury is a prime example of the Veblen and Panoplie effect. Veblen reflects a growing consumer demand based on a perception: the more expensive something is, the more exclusive it is. Panoplie mentions the concept that luxury goods help owners to rank in a higher social class.
Bullish Strategy and limited quantity of some fashion houses is also the cause of promoting luxury shopping.
In the luxury industry, brands typically adjust prices at least 1-2 times a year. This enhances the brand’s profit margins and exclusivity. Only in the first six months of 2021, big brands have not stopped raising prices. Louis Vuitton and Prada raised prices five times, Chanel, Burberry and Celine raised prices twice, Hermès once. From November 3, 2021, the Small Classic bag of the French fashion house increased to $ 8,429, 16% higher than the end of September. The 2.55 Chanel bag cost $ 8,830, an increase of more than $ 2,000 compared to December 2020.
Increasing prices makes products more coveted. Above BOF, Luca Solca, a senior research fellow at Bernstein, said: “Price increases are a way for brands to send the message: products are valuable items, customers must buy now before they continue to increase.” Solca also thinks that this attracts high-class players in showing their class.
In addition to raising prices, Chanel also created drama when applying a new policy in Korea and China, allowing each customer to buy only one bag a year. In this way, many people’s cravings were activated. Lee Jung Min – CEO of the strategic consulting firm Trend Lab 506 – mentioned above Korea Times: “The harder things are to buy, the more appreciated they are. It’s a wise and effective marketing strategy.”