Luxury Industry Price Hikes... Secondhand Market Expands

Luxury Industry Price Hikes Spark Interest in Secondhand Luxury Market
Luxury Rental Services Also Popular

[Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] Recently, as luxury brands have successively implemented price increases, interest in the secondhand luxury market is heating up. Unlike in the past when consumers hesitatedlessly purchased high-priced products for immediate satisfaction, the recent surge in inflation has led more people to consider rational consumption for the future. Furthermore, some consumers are opting to use rental services that allow them to borrow luxury items only on special occasions such as anniversaries, rather than owning them at a high cost.

Luxury brands have been raising prices continuously. Chanel implemented its third price increase this year. The iconic "Classic Line" of Chanel saw all prices rise starting from the 10th of this month. The Classic Flap Bag Small increased from 11.05 million KRW to 11.6 million KRW, and the Medium from 11.8 million KRW to 12.39 million KRW, both up by 5%. The Large size also rose from 12.71 million KRW to 13.35 million KRW, a 5% increase. Chanel had also raised prices four times last year.

Gucci raised prices on some products in February and again increased prices on major items such as handbags in June. The increase was around 10%. Additionally, Louis Vuitton raised prices on major handbag products by approximately 8-26% in February.

Luxury companies cite rising raw material and labor costs, as well as exchange rate fluctuations, as reasons for periodic price hikes. However, some critics call this "bold profiteering" due to the short intervals between price increases.

Luxury brand Louis Vuitton store. [Image source=Yonhap News]

On top of that, soaring inflation is spreading a trend toward more rational consumption of luxury goods. Especially among younger consumers who do not yet have strong purchasing power, attention is turning to the secondhand luxury market as a way to own luxury items at a lower cost.

Accordingly, the related market size is expanding further. SSG.com reported that as of July this year, sales of secondhand luxury goods increased by 220% compared to the same period last year. Also, the online luxury platform Trenbe reported that luxury watch resale transactions in the past three months surged by more than 1667% compared to the same period last year.

Meanwhile, luxury rental services are also gaining popularity. These services allow customers to borrow high-priced luxury bags, watches, or clothing for short-term use on special occasions rather than purchasing them outright. Since it is difficult to buy such expensive items outright, being able to use them for a desired period at a lower price has made these services popular especially among younger consumers. The luxury rental service platform "Rentit" announced that its sales in the first half of this year grew 153% compared to the same period last year, with cumulative sales exceeding 7 billion KRW.

Office worker Kim Suji (31), who has used luxury rental services, said, "After social distancing measures were lifted, there were many weddings among acquaintances, so I started paying more attention to my outfits." She added, "I considered buying a luxury bag, but the cost was burdensome. Also, even if I spent a lot of money to buy one, I thought I wouldn't use it much except on special occasions, so I decided to use the rental service." She continued, "At department stores, bags that cost several million won can be rented for around 50,000 KRW per day, so it’s a rational consumption."

Meanwhile, the domestic luxury market continues to grow steadily. According to the global market research firm Euromonitor, the Korean luxury market, which was valued at 12.7267 billion USD (about 17.041 trillion KRW) in 2019, grew by more than 10% last year to 14.165 billion USD (about 18.96 trillion KRW), ranking seventh in the world. In particular, the jewelry (5%) and watch (7%) sectors recorded high sales growth rates, driving the overall growth of the luxury market.

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