![I thought Chanel’s popularity would last forever… “Isn’t this a discount?” [안혜원의 명품의세계]](https://i0.wp.com/img.hankyung.com/photo/202302/99.32535963.1-1200x.jpg?fit=%2C&ssl=1 "I thought Chanel’s popularity would last forever… “Isn’t this a discount?” [안혜원의 명품의세계]")
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[안혜원의 명품의세계] Episode 28
At the sky-high price… Demand ‘pops’
The open-run procession was cut off and the resale value fell
Luxury brands “concerned about a hard landing in growth”
“You can enter right away.” On the afternoon of the 10th, a Chanel store in Gangnam, Seoul was quiet, contrary to expectations. The waiting line that had been lined up every time has completely disappeared. The store staff said, “There is no long wait these days.”
Recently, Chanel stores in major department stores, such as the main branch of Lotte Department Store Avenuel in Jung-gu, Seoul, the main branch of Shinsegae Department Store, the main branch of Hyundai Department Store in Apgujeong, and the main branch of Lotte Jamsil Avenuel, have almost no queues on weekdays. It is different from last year, when there were so many people that it was difficult to enter the store on the same day even if you stood in line for several hours due to the ‘open run’ (the act of running and purchasing as soon as the store opened).
It is an atmosphere that even consumers who occasionally visit the store do not easily open their wallets. Most of the popular products, such as the classic flap bag, vanity bag, and 22 bag, that were ‘not available for sale’ were left at the Chanel store we visited that day, but consumers often left the product saying, “It’s too expensive.” A female consumer in her 30s who visited the Chanel store that day said, “I came because I wanted to try on the product at the store.”
In fact, the consumer price of Chanel products has risen so much that it is said that it is equivalent to the price of a ‘small car’. Chanel raised the price of products such as bags by up to 13% in November last year. After 2012, it was a total of 4 price increases in 2022 a year. The classic medium bag, considered Chanel’s representative product, has risen to 13.16 million won. This bag has nearly doubled compared to November 2019 (7.15 million won), before the novel coronavirus infection (Corona 19).
Looking at the increase in the price of classic bags of different sizes in the same product category, △ New Mini 5.94 million won → 6.37 million won △ Small flap bag 11.6 million won → 12.37 million won △ Maxi handbag 14.13 million won → 15.08 million won, etc., jumped 6-13%. Another popular product, the Gabriel Hobo Small, rose 7.41% from 6.88 million won to 7.39 million won, and the chain wallet (WOC) rose 8.27% from 3.99 million won to 4.32 million won.
On the other hand, the resell price is gradually declining. It is an analysis that as the price increase cycle becomes shorter, the so-called ‘homeless run’ (open run where you wait in front of the store all night before purchasing) targeting the resale market is reducing the rarity of Chanel products and the premium is disappearing. According to Resell Platform Cream, the price of Chanel Classic Flap Bag Medium Size Resell is about 11.65 million won as of the end of last month. It was sold for 14 million won just a year ago, but the resale price has fallen by more than 2 million won. The point is that it is lower than the regular price (13.16 million won), let alone more money. Now, it is not unusual to browse products in stores and purchase them in the resell market.
The worries of luxury brands have also deepened. If this trend continues, it is clear that this year’s luxury sales growth will decline.
“If prices continue to rise this fast, luxury brands may have to make ‘painful corrections’, damaging their brand value in the process,” said Luka Solka, a researcher at Bernstein, a global investment firm. . An official from a luxury goods company also said, “I predicted that the growth rate could slow down somewhat as the price was raised rapidly, but I did not know that the atmosphere would change so quickly.”
Chanel is in a position to regularly adjust prices to account for production costs, changes in raw materials and exchange rate fluctuations. The US Wall Street Journal reported early last year that “Chanel has started repositioning its brand with a higher rating by taking advantage of the surging demand.” In the industry, there is also an analysis that it has set out to super-luxury to catch up with Hermes. In fact, Chanel even announced a ‘private boutique’ for the super-rich. It is a message that the store is also working hard on marketing to catch VIPs (excellent customers).
However, it is unknown whether Chanel’s ‘Hermeshwa’ strategy will succeed as consumption demand declines faster than expected. After the COVID-19 subdued phase, overall spending on luxury goods decreased as spending was focused on other areas, such as the resumption of overseas travel. Growth in China, which dominates luxury sales, is also slower than expected. China’s economic growth rate, which stood at just 3% last year, fell far short of the original target of 5.5%. In fact, after the economic boom in China from 2010 to 2014 ended, many luxury goods were reduced in price due to sluggish sales. Even Chanel has slashed the price of its major products by 20% and has gone on sale. It seems that there is no law that this won’t happen again if the recent bad atmosphere continues.
Ahn Hye-won, Hankyung.com reporter anhw@hankyung.com
