More bling for your buck: Watches, jewelry lead new luxury trend

Industry

More bling for your buck: Watches, jewelry lead new luxury trend

Published: 31 Aug. 2024, 06:00

KIM JU-YEON
kim.juyeon2@joongang.co.kr

BTS's V dons a Cartier watch and jewelry in his shoot for W Korea. [W KOREA]

[NEWS IN FOCUS]

Chanel and LV Monogram bags, Gucci loafers and Celine caps: coveted items, but not an uncommon sight on the streets of Korea.

To distinguish themselves from the crowd, high-spending consumers are looking to jewelry and watches. Brands are banking on this for a rebound in the domestic market.

Luxury accessory brands have been entering the affluent Cheongdam-dong neighborhood in southern Seoul with flagship stores, reflecting a broader shift in the market, global real estate services firm Cushman & Wakefield said in its second quarter retail report on Tuesday.

Even as high-fashion goods such as clothing and bags remain a mainstay, the suppliers' expansion into accessories is clear. In addition to the stores' emergence in the popular shopping district, fashion brands have also been diversifying their portfolios to focus on jewelry and watches.

Fashion house Chanel's jewelry and watches [CHANEL]

Swiss watchmaker Audemars Pigue opened a global flagship store in Cheongdam on Aug. 13, and New York-based jeweler Tiffany & Co. is set to open one in late 2025. Fashion boutiques are also getting in the game, with Louis Vuitton opening its first watch and jewelry store in April in Shinsegae’s Gangnam department store, while Chanel Korea held a pop-up store for fine jewelry in the Seongsu area, eastern Seoul, in July.

Data tracker Statista estimates revenue from Korea’s luxury goods to amount to $7.1 billion in 2024, with the largest volume coming from luxury watches and jewelry at $2.26 billion. The global watch and jewelry market market outperformed in 2023, with revenue for major brands rising 3 to 6 percent.

Consumers want top-of-the-line

High-fashion items such as handbags, shoes and wallets sold well in the industry’s earlier stages. But with more consumers adorning designer brands and industry growth becoming stagnant, both supply and demand have branched out to tap into other sectors.

Customers either look to manufacturers that are considered top of the line even amongst luxury brands and to more expensive goods like watches and jewelry, or extend the demand for luxury to other consumer goods, like coffee or sportswear.

Customers wait to enter a luxury brand outlet at a department store in April 2023. [NEWS1]

"In Gangnam's Shinsegae Department Store, there are separate stores that sell high-fashion items, such as handbags, and those that sell jewelry and watches. Nowadays, the Chanel bag stores are empty while the watch and jewelry stores have long lines," a source at LF, a major domestic importer of luxury designer brands, said.

"People used to perceive luxury watches and jewelry to be something only older people wore, but the younger generation now buys them as wedding gifts or fashionable items," the source said on condition of anonymity.

Brands go big on pricing and promotions

On the supply side, luxury brands — which have exhausted their cost-saving tactics — focus on growing sales through pricing and promotion strategies, according to consulting firm McKinsey in its fashion industry outlook for 2024. Asian markets are less susceptible to price hikes, especially for top-tier brands that cater to high-net-worth customers.

Jeweler and watchmaker Cartier recorded 1.5 trillion won ($1.1 billion) in sales in Korea from April 2023 to March this year, its highest annual revenue ever. Its sales were notably boosted after the brand raised the prices of its best-selling products such as Love rings and Tank watches in April and November of last year.

V's first Panthère de Cartier campaign [CARTIER]

K-pop groups BTS's V and Blackpink's Jisoo were named brand ambassadors in 2023 and 2022, respectively. V's first Cartier campaign, which featured him wearing a $26,700 necklace, led to a crash of the retail website and the product immediately sold out.

Meanwhile, fashion houses including Chanel Korea and Christian Dior Couture Korea saw slower growth and a drop in operating profit last year despite raising their prices. Louis Vuitton Korea recorded a decrease in both revenue and operating profit. Jewelers Tiffany and Bulgari as well as Swiss watchmaker Rolex also saw a decline in the domestic market.

Hard luxury goods thrive in rocky economy

High-end hard luxury products — durable items such as jewelry, watches and leather goods — fare better than clothes or shoes from wear and tear, and are also considered investment pieces.

Consumers tend to spend on trusted categories and brands that can also have potential investment value in tough economic times, McKinsey said.

Though Korea’s Consumer Sentiment Index rose in June compared to May, indicating stronger consumer confidence, high perceived inflation, weak real income growth and high interest rates have constrained consumption.

Korean customers — especially first-time luxury buyers — have therefore been more pragmatic about their choices, opting for simple and classic designs, or splurging on accessories that also serve social functions, such as wedding gifts.

Cartier saw a boost in the sales of its Love rings and bracelets, which are popular among engaged couples, as the number of weddings increased in Korea following the lift of Covid-19 restrictions.

Its watches also do particularly well in the pre-owned market. While the 140 most popular brands for watches lost 2.39 percent on average when sold secondhand, the most popular Cartier models gained 5.4 percent, according to data from pre-owned watch market tracker Chronopulse.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]