Chanel loses appeal among Korean consumers due to steep price hikes

The Korea Times

The Korea Times

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Mon, October 2, 2023 | 10:04

Companies

Chanel loses appeal among Korean consumers due to steep price hikes

Posted : 2023-02-13 09:08

Updated : 2023-02-14 10:54

Customers wait in line in front of Chanel's boutique at a department store in Seoul, on Jan. 7. Korea Times file

By Kim Jae-heun

A 32-year-old housewife surnamed Park was surprised that there wasn't a long line to enter Chanel's boutique when she visited a department store in Seoul last week. It was not a scene she was used to, with people normally waiting for up to six or seven hours just to enter the store.

"It was Monday afternoon when I went to the store. But still, I always had to wait at least two hours. It was the first time in recent years that I didn't have to wait and could go into the store right away," Park said.

A 34-year-old pharmacist surnamed Jeon said she understands why Chanel has been raising the prices of its products so often.

"Chanel bags are a dream item for many women in Korea. That is why they save up money to buy one or ask for one as a wedding present from their husbands. But this is only under the circumstance that the prices are affordable, at least to a certain level. Chanel has been raising the prices of its items by a million won ($787) every three to six months in recent years and there are not many who can deal with it," Jeon said.

Chanel raised the prices of most of its handbags and other accessories by up to 13 percent last November. Previously, the luxury brand increased the prices of its products three times in one year.

The price of its most popular item, the Classic Medium Flap Bag, is now 13.16 million won, which is almost double the 7.15 million price tag in November 2019.

Other sizes of Chanel's Classic Flap Bag have seen their prices rise from 6 percent to 13 percent at the same time.

Meanwhile, the prices of Chanel's handbags in local resell markets are declining ― meaning there is not much demand for them.

One of the country's largest online resell platforms, KREAM, shows the Classic Flap Bag's price at 11.65 million won. The price has gone down from 14 million won just a year ago.

As Korea's government lifted the overseas travel ban and people rushed out to spend their money on holidays, demand for luxury shopping has plunged. Also, the rise in the cost of living ― affected by global inflation ― has tightened consumers' purse strings on non-essential goods.

"Nobody is going to buy luxury goods when the cost of living has gone up in regard to transportation and dining out. Nonetheless, Chanel seems like it has no intention of stopping its product price increases. They will only be able to target the super-rich from now on," Jeon said.

jhkim@koreatimes.co.kr