- Luxury demand in Seoul soars as COVID curtails duty-free travel and shopping
- Chanel store traffic down 30% since it started screening customers
- Wholesale buyers are looking for $10,000 bags and reselling them well above in-store prices
- Pre-dawn queues for “open shopping” outside Chanel boutiques
- South Korea, 7th luxury market in the world – Euromonitor
SEOUL, March 17 (Reuters) – As COVID limits travel and duty-free shopping, South Koreans are driving a boom in luxury goods at home that has left Chanel excluding nearly a third of potential buyers to prevent wholesale buyers snag $10,000 bags for resale with markups of 20% or more.
The famous French fashion and luxury company told Reuters it had seen traffic to its stores in South Korea take a turn for the worse since it started looking for customers it said could stock up just to look to others on the resale market.
“We were able to identify them (wholesale buyers) after analyzing their shopping habits. Since this policy was put in place, traffic to our stores has decreased by 30%,” Chanel told Reuters in a statement. communicated. It did not reveal exactly how it considered these customers to be potential wholesale buyers, and the private company does not disclose sales figures by country.
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Chanel’s strategy, implemented since July last year, came as global demand for luxury goods picked up after the worst of the coronavirus pandemic. South Korea is the world’s seventh-largest luxury goods market according to Euromonitor, and the research firm estimates it was one of only two of the top seven markets by revenue – the other being China – to see. its sales increase last year from 2019 levels.
Sourcing of brands like Chanel, however, is tightly controlled, preserving exclusivity and enhancing appeal with no online shopping options beyond cosmetics, fragrances and a few small accessories. Such is appetite in downtown Seoul that long pre-dawn queues form outside department stores as shoppers prepare for what is known as an “open race” – a sprint to the doors of Chanel at opening time.
“I arrived (…) at 5:30 a.m. for a free ride and was informed that there were more than 30 people ahead of me,” a shopper told Reuters outside a Chanel boutique in Seoul. Speaking on condition of anonymity for privacy reasons, he said by the time he entered the store – nearly 10 hours later – the item he wanted had sold out.
Reflecting such scorching demand in the resale market, a classic medium Chanel flap bag sold for 13.5 million won ($11,031) – 20% above its standard retail price – in January on KREAM , a platform offering everything from sneakers to technology and luxury goods that is a subsidiary of tech giant Naver Corp (035420.KS).
KREAM, an acronym for “Kicks Rule Everything Around Me”, was launched in 2020. It told Reuters its monthly transactions exceeded 100 billion won in December, and said the resale market in South Korea was worth more of 1 trillion won – nearly $820 million – even at the most conservative estimates.
While resale platforms like KREAM offer an array of brands, Chanel, like Swiss watchmaker Rolex, is a particularly sought-after brand due to its status among couples in South Korea as one of the most popular wedding gifts. popular, and frequent price increases of its most iconic handbags.
Chanel raised the prices of select handbags, accessories and seasonal ready-to-wear earlier this month in Asia and Europe, including by 5% in South Korea – where prices have just been raised for the fifth time in nine months, according to Chanel Korea. Read more
Along with its screening of wholesale shoppers, Chanel said it has a “queue management system” in place: customers are asked to give their contact number and the reason for visiting the store so that they can be informed by SMS when they can enter the shop.
Brand experts and consumers are divided on the impact of the new shopping model on Chanel.
“Consumers voluntarily advertise Chanel for free – camp outside (shops), shop open, post their experiences on social media,” said Lee Eun Hee, a professor of consumer science at the University. Inha.
“I think all of these phenomena have helped Chanel attract younger customers and make a lot of money.”
Still, some consumers say the long lines and waiting lists put them off.
“I gave up buying a Chanel product a long time ago,” said a Seoul resident in her 30s, declining to be named for privacy reasons.
“It’s too hard to buy one, with around 300 people usually on the waiting list, and by the time it’s my turn, there’s no more product. It really puts me off and I don’t want to to be at the center of this madness.”
Big buyer-resellers aren’t giving up anytime soon.
Speaking on condition of anonymity due to the sensitivity of the issue, some dealers told Reuters they were hiring ‘linemen’ for a fee of up to $125 a day to queue or get in in stores on their behalf.
A dealer in his 30s told Reuters he resells his purchases with typically more than 20% profit – and it can be much more profitable when stock levels are low.
He said he recently sold a Chanel flip card holder on second-hand market app Karrot for nearly 1 million won, 40% above its retail price – five minutes after it was put on. on sale.
($1 = 1,223.8700 won)
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Reporting by Heekyong Yang in Seoul and Silvia Aloisi in Milan; Editing by Miyoung Kim and Kenneth Maxwell
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