Why are Koreans rushing to buy expensive luxury goods from Louis Vuitton, Chanel and Dior – while ignoring discounts at local fashion brands?

Jul 11 , 2020

Shoppers look at discounted winter coats on sale in Seoul, but it’s the more expensive luxury brands like Louis Vuitton, Chanel and Dior that have been pulling the crowds. Photo: Reuters

Popular demand for high-end labels has seen them hike prices even further during the Covid-19 crisis, while Samsung C&T, LG and Kolon fashion brands flounder and have been forced to discount

The prolonged Covid-19 crisis has shown a clear contrast in support for international luxury firms and domestic fashion companies in South Korea.

People queued up outside the Chanel boutique amid the coronavirus outbreak in Seoul to buy luxury goods before price mark-ups were introduced. The brand has since increased its prices by up to 26 per cent. Photo: Reuters

Despite luxury brands hiking their prices, people formed queues in front of their boutiques while local labels offered deep discounts, yet not many were interested.

Both Louis Vuitton and Chanel raised prices for their products here in May. It was the second time for Louis Vuitton which had already changed prices for some items in March, while Chanel had increased its prices by up to 26 per cent. But complaints were rarely heard. In fact, people rushed to the boutiques to buy luxury goods before the mark-ups.

The same scene was played out in front of Dior's stores in Seoul on July 1, when it was reported the French fashion house would increase prices by 12-15 per cent.

There were three to four times more customers than usual in front of Christian Dior boutiques in Seoul, similar to scenes two months ago when people formed long queues before opening hours when Chanel was rumoured to be considering increasing its prices.

The price for Dior's most popular Lady Dior Medium Bag increased by 12.7 per cent, becoming 700,000 won (US$583) more expensive. Its other steady-seller, the Dior Mini Bag, was also marked up by 14.6 per cent to cost 5.1 million won (US$5,260) as of Thursday.

On the same day, domestic firm E-Land's fast-fashion brand SPAO announced it would start a clearance sale from Friday offering discounts of up to 79 per cent for a total of 1,500 items. And Samsung C&T's fast-fashion brand 8 seconds started its regular season sale early to sell clothes for discounts of up to 60 per cent.

Piling up stock is never good for fashion companies, as it not only drags down sales records but also reflects as a loss from the value of inventory. It turns an operating loss into a net loss.

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