With One Click, a 10 Million Won Hermes Bag Arrives... Luxury Brands Nesting Online "Banggu-seok Flex"

Lowering Luxury Brand Barriers and Nesting Online... Hermes, Cartier, and Others Open Official Korean Malls
Chanel and Gucci Expand Partnerships with Domestic IT Platforms... Online Luxury Consumption Expected to Surge

[Asia Economy Reporter Lee Seon-ae] Lee Jian, who loves the Herm?s brand, accesses the official Herm?s Korea online mall every day. She is currently waiting for the sandals she wanted to buy to be restocked after they sold out. Although the number of products has decreased due to more frequent sellouts compared to the initial opening, thanks to her quick clicks recently, she was able to purchase a bag worth 11.65 million KRW (Herm?s 2002). Lee said, "Due to COVID-19, going out has been difficult, which led to depression, but lying in bed and browsing and purchasing products on the Herm?s online mall brings me great joy."

The era of "room flex" (a new term meaning showing off by spending money while staying indoors) is officially beginning. Luxury brands that insisted on offline stores only, citing reasons such as maintaining service quality and premium image, are gradually establishing their presence online. This is seen as an inevitable phenomenon considering the acceleration of the untact (contactless) trend due to the spread of COVID-19 and the consumption tendencies of the emerging major consumer group, the MZ generation (Millennials + Generation Z born after 1995).

Hermes Korea Official Online Mall Capture

◆Luxury brands partnering with Naver and Kakao= According to the industry on the 16th, following the opening of the official Herm?s Korea online mall, luxury brands such as Chanel and Gucci are taking a step further by establishing their presence on domestic IT companies' commerce platforms, rapidly advancing the 'online transformation of luxury.'

Herm?s maintained its pride to uphold its premium image but eventually gave in last month and opened the official Korean online mall. At launch, about 30 types of bags were stocked, but due to continuous sellouts, only 12 types are currently available. Various luxury communities joke that one must click within a second to purchase as items sell out immediately upon restocking. Recently, Cartier also opened the first official Korean online mall among watch and jewelry brands, followed by Prada, which renewed its site and opened the official Korean online mall as part of its enhanced global digital strategy.

Chanel and Gucci have expanded their reach by partnering with the largest domestic IT platforms. Chanel recently opened a premium luxury brand Chanel specialty store on KakaoTalk Gift. This is Chanel's first official entry into the domestic online mall market, excluding department store online malls. Gucci operates its brand store directly in partnership with Naver. Unlike Chanel, which is limited to cosmetics, Gucci offers full-fledged products such as leather handbags, shoes, and clothing worth millions of KRW. An industry insider commented, "Previously, luxury brands were only accessible through department stores or official online malls, but now it is a meaningful trend that they can be purchased like everyday products on messenger apps or commerce platforms provided by domestic portal sites."

Capture of Cartier Korea Official Online Mall

◆Luxury grows despite COVID-19 and low growth= Experts believe that the 'online transformation of luxury' will spread further amid the economic downturn caused by COVID-19. The reason is that luxury brands' growth rates were higher during periods of low economic growth. According to SK Securities, comparing the sales growth rates of LVMH and Kering over ten years from 2009, divided into the bottom 10% and top 10% of economic growth rates, luxury brands' sales growth was about 1.7 times higher during periods of relatively low economic growth (bottom 10%) than during high economic growth (top 10%).

Kim Su-jeong, a researcher at SK Securities, said, "Chanel's open run, Herm?s' record daily sales, and LVMH's sales increase in April indicate that even in a bad economy, the era of flexing with luxury has arrived," adding, "The world is entering a low-growth phase due to COVID-19, but the era of flexing with luxury has officially begun."

Accordingly, the online share in the luxury market is expected to increase rapidly. According to Bain & Company, the global personal luxury market size last year was $308 billion, growing 7.3% compared to the previous year. Among this, the online share reached 12%. This market is further segmented into direct purchase malls (38%), brand official malls (34%), and distribution company online malls (28%). Among personal luxury products purchased online, accessories (bags, shoes) account for the largest share at 43%, followed by clothing (27%), cosmetics (19%), and jewelry and watches (11%). Bain & Company forecasts that the online share in the luxury market will increase to 25% by 2025.

Bain & Company analyzed, "As everything is becoming online, by 2025, the online share in the luxury industry is expected to expand faster and larger," adding, "The capacity to cover losses from offline sales will continuously strengthen."

This content was produced with the assistance of AI translation services.