Limiting the power of luxury goods
A few days ago, I had a tea with two stylish white people who looked like they were straight out of a fashion magazine. They worked for the Asian marketing team of a luxury fashion brand, and they were anxious because the company was struggling to expand its business in Korea, where the high-end fashion market is growing at a rapid pace. They asked me outright, “How can we make a level of revenue similar to that of Chanel, Hermes and Louis Vuitton in Korea?” I had an answer: “You have to get your products into wedding registries.”
In the last few years, expensive luxury products have been added to the list of must-have items for newlyweds. Grooms generally get a watch, while brides receive a gift of a handbag. These special gifts can cost thousands of dollars. Thanks to this trend, sales of luxury goods at high-end department stores are growing despite the international economic slump. According to the Ministry of Knowledge Economy, the luxury market grew by 16 percent in 2009, by 12 percent in 2010 and then by 20 percent last year.
The marketing specialists said they were aware of the trend and asked how to get onto gift lists. While I didn’t have an answer, a recent report by a department store may provide a clue. The report was about the top three brands purchased by celebrities: Chanel, Hermes and Louis Vuitton. Koreans are known for obsessing over celebrities, in both positive and negative ways. But celebrities have an absolute influence on the industry, and every day, portal sites with photos of celebrities get millions of hits.
The marketing specialists observed that high-end marketing seems to work very well in Korea, and they’re right. In January and February, Chanel, Hermes and Prada raised their prices by 5 to 10 percent, and their sales actually increased.
Maslow’s Hierarchy of Needs is often cited as a psychological explanation for the consumption of luxury goods. Such purchases may fulfill a need for respect or self-esteem, and maybe luxury goods are especially popular in Korea because there are not many other ways to get these things. We live in a society where you are treated well when you have an expensive car or carry a fancy purse. But if we didn’t need to prove ourselves through educational, financial or social background, or appearance, the unusual popularity of luxury goods would perhaps die down naturally.
The author is an editorial writer of the JoongAng Ilbo.
by Lee Na-ree
with the Korea JoongAng Daily
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