"Only Consumers Suffer"...Luxury Goods Raised Prices All Year Round, Sold Out Due to High Demand

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[Asia Economy Reporter Seungjin Lee] Luxury brand Prada has implemented its sixth price increase this year. Major luxury brands have raised prices 2 to 6 times within a single year, marking an unprecedented frequency of hikes. As domestic luxury consumption surged due to COVID-19, there are criticisms that global sales slumps are being passed on to Korean consumers.

This year, major luxury brands have carried out the most frequent price increases in history. Especially for flagship products representing the brands, prices have risen 2 to 4 times within a year, making the perceived price hikes even more significant for consumers.

On the 17th, Prada raised prices on most bag products by 5 to 10%. The price of the ‘Prada Duelle Nylon Shoulder Bag’ was increased to 1.79 million KRW, about 10% higher than the previous price of 1.64 million KRW. Including bucket bags, most popular products saw price increases that day, with some items rising by as much as 500,000 KRW.

Prada has made six known price increases this year. Starting with a 4% increase on nylon bucket bags in January, the brand has continuously raised prices every month or every two months. In May and August, some product prices were adjusted twice within a single month. For new products not registered on the domestic website, prices were raised without special announcements, effectively resulting in nearly 10 price increases within a year.

Despite frequent price hikes by luxury brands, product demand is actually increasing. With prices rising by millions of KRW overnight, anxiety over unpredictable price increases has led to crowds of consumers lining up in front of stores. Along with consumers preparing for weddings or gifts, the number of ‘resellers’ aiming for price arbitrage has also surged.

As news of the price increase spread, consumers began lining up an hour before the Chanel store opened.

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In the case of Chanel, after the fourth price increase this year last month, the prices of all classic bag line products surpassed 10 million KRW. Until the first half of this year, the ‘Small’ size in this line was priced at 7.85 million KRW. News of price increases by millions overnight led to tents being set up at stores with people lining up from early morning, and even proxy queueing part-time jobs appeared.

Luxury brands cite exchange rate fluctuations, raw material cost increases, and rising labor costs as reasons for price hikes, but critics argue that raising prices multiple times a year is excessive. Nevertheless, major luxury brands like Herm?s and Chanel have indicated plans to raise prices again early next year.

Along with price increases, demand has also grown significantly, and last year South Korea’s luxury market ranked 7th worldwide. According to market research firm Euromonitor, global luxury sales fell by 18% last year. In contrast, South Korea’s luxury sales reached $13.5397 billion, moving up to 7th place. Among countries ranked higher than South Korea, China was the only one to see an increase in luxury sales last year.

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