Price hikes on luxury goods receive pushbackPrice increases by international luxury brands like Hermes and Chanel at the beginning of the year are routine in Korea.
But some are being criticized for trying to take advantage of a Korean tendency to think that the pricier a product is, the better.
Hermes instituted price hikes on key products averaging 2.6 percent on Jan. 6 - less than a year after hikes in Korea and other key markets last February.
The price tags on its signature Birkin and Kelly bags have become 2.7 percent and 3.1 percent more expensive, whereas a Carres 90-centimeter (35-inch) scarf now costs 590,000 won ($493), 1.7 percent up from 580,000 won.
Duty-free stores are expected to raise prices next week, but no news of price updates at Hermes stores outside of Korea has been heard.
Chanel raised prices of cosmetics products by 1 to 5 percent at department stores and duty free shops, effective on Jan. 1. The French luxury house announced price increases for bags by an average of 4.4 percent last May, when demand peaks among women getting married.
“Luxury brands adjust prices once or twice a year depending on raw material prices and currency fluctuations,” said a spokesman from a department store.
Chanel’s pricing in Korea has been unpredictable. The brand lowered prices of some of its products by up to 20 percent in March 2015, citing the euro’s steep depreciation and a desire to align with global pricing. It reversed its stance to raise prices by 7 percent just eight months later. Its spokeswoman was not available for comment.
Another popular brand, Louis Vuitton, was quicker to execute price hikes at the end of last year by an average of 7 percent.
Brands have shown an opposite approach in neighboring countries. In Japan, Cartier, Gucci and Bottega Veneta lowered prices by up to 8 percent since last September, whereas China saw cosmetics brands belonging to Estee Lauder reduce prices by up to 18 percent on Jan. 5.
“Luxury houses are being brazen about taking advantage of the prevalent consumer psychology in Korea: pricier goods sell better only if they carry a premium or luxury label,” said a fashion industry insider.
“Those companies are more cautious about price adjustments in Japan, where consumers tend to be more conscious about reasonable spending, and in China, where an anti-corruption campaign is underway.”
BY SEO JI-EUN [email@example.com]