Luxury brands increase their prices once again
The French company is going to up the prices of its goods, including handbags, shoes and accessories, by 3 to 10 percent from Tuesday, just a year after the last increase.
Its Garden Party 36 bag now retails for 4.98 million won ($4,160), up 3.3 percent from 4.82 million won, while the Picotin 18 bag costs 6.5 percent more at 3.77 million won.
The decision is in line with its global strategy, Hermes explained, as the company increased prices in Europe starting Jan. 1.
Rolex, the Geneva watchmaker, upped the prices of its models on Jan. 1, the first price rise in two years. The Rolex Submariner now costs 11.42 million won, up 15.9 percent from 9.85 million won, and the price of the Submariner Green, the so-called "Starbucks" due to the color, rose 16.4 percent to 13.57 million won.
Chanel and Louis Vuitton have been in the habit of increasing prices and may do so again soon. Chanel upped its prices four times last year, Louis Vuitton five.
The high-end brands say the price increases are inevitable due to the rising costs of raw materials and labor, as well as the exchange rates.
Despite the price changes, demand for luxury products is still high in Korea, with customers forming long lines in front of the stores even before opening time. The domestic luxury goods market size is estimated at $14.2 billion as of last December, according to market tracker Euromonitor International.
Global companies are using the Korean frenzy in their marketing strategies. Some brands only give customers who have already bought the company's product before, or on condition that they buy a certain amount of other items, the chance to purchase their products.
In order to purchase the Hermes Birkin bag or Kelly bag, a person in Korea needs to spend about 40 million won to 100 million won on other products, such as diaries, blankets and plates.
Purchasing luxury bags has become a type of investment for speculators in Korea, as they can profit by reselling the products after the prices go up. A Hermes Birkin bag can be sold 5 million won to 20 million won above retail in the resale market.
BY KO SUK-HYUN [email@example.com]