Cartier joins Chanel in raising price amid virus resurgence
People wait in line to purchase Chanel products before a price increase, in front of Lotte Department Store in Myeong-dong, Seoul, May 14. / Korea Times photo by Lee Han-ho
By Kim Jae-heun
Amid concerns growing over a second wave of the COVID-19 pandemic in Korea, French luxury watch and jewelry brand Cartier said it will raise the price of all its products here starting Sept. 1.
According to a luxury industry source, Cartier's prices for watches and jewelry are expected to increase by 2 percent and 4.5 percent, respectively.
The decision is receiving criticism as the increases are taking place amid a prolonged worldwide economic slump.
Due to tourism restrictions between countries, the number of travelers to Europe has decreased, leading to nosediving sales of luxury brands. Critics say Cartier and other fashion houses such as Chanel are frequently raising their prices to make up for poor business performances in their homelands.
Chanel increased its price for several leather goods including the Boy Chanel card holder earlier this month.
This came as a surprise to many customers as it had already raised prices for its signature items by 15 percent to 26 percent in May.
Normally, high-end fashion brands increase their prices twice a year, which made people think Chanel's price hike would come in November like last year.
It is hard to condemn the luxury brands for raising prices upon the principle of capitalism, but there is growing antipathy here that they are trying to use the pandemic as an opportunity to pursue bigger profits.
Chanel Korea said it was only following its headquarters' pricing policy, which it cannot discuss.
The industry source said Chanel's price hike was expected.
The exchange rate of the euro to the Korean won has risen to the 1,400 won range over the last four months. So it appeared inevitable that Chanel would raise prices in accordance with its "price harmonization” policy.
Chanel headquarters has been adjusting the price gap between countries using euros and those that do not, to match the price difference with France to between 7 percent and 10 percent.
In May, the euro soared by 10 percent versus the U.S. dollar and by 5 percent in July. This was the biggest climb in a month since September 2010. The sharp increase has made prices of Chanel's products in France the same or more expensive as those in Korea (in Korean won terms).
The source also expects price hikes in the United States, China and Japan.
There was one instance when the prices of Chanel items went down here because the value of the euro fell sharply against a number of currencies including the U.S. dollar, Chinese yuan and Korean won.
In 2014, the value of 1 euro dropped from nearly 1,500 won to 1,200 won. Chanel headquarters raised prices in Europe and lowered prices in Korea, China and Russia. Nothing like this has happened since.
Chanel Korea said its harmonization policy aims to reduce the price gap between countries to guarantee price consistency around the world.
“Harmonization is scheduled before our collection begins and it will keep the price difference within a 10 percent margin,” a Chanel Korea official said.
Store clerks at Chanel boutiques have been notifying customers that prices will soon rise, urging them to make purchases if they have plans to do so.
However, the clerks have been saying they don't know which specific items will see a price rise and that they are notified by headquarters only two to three days in advance.