"Sold in Korea"...Global Luxury Stock Heads to Hanguk

New 230 Million Won Items and Global Luxury Brands Flocking to Korea

[Asia Economy Reporters Hye-seon Lim, Min-young Cha] Luxury brands struggling due to the novel coronavirus disease (COVID-19) crisis are redirecting their supplies from the U.S. and Europe to the Korean market. Although demand for luxury goods has decreased in most countries worldwide due to the pandemic shock, Korea uniquely continues to uphold the 'luxury invincibility' myth. As a result, luxury brands are prioritizing the Korean market as a 'key country' and allocating new products and inventory there first.

According to the luxury industry on the 18th, Fendi ran out of domestic stock of the 'Baguette Bag' for this spring-summer season and imported items from Europe and the Americas. They imported a limited quantity of 10 pieces per color and size for Korea, and as sales proceeded faster than usual, the Italian headquarters reallocated stock from the U.S. and Europe to Korea. Cartier also changed the priority order for new product and inventory arrivals to Korea and Singapore after the COVID-19 outbreak. Previously, inventory was primarily allocated to the U.S., Hong Kong, Europe, and China, with Korea ranked lower.

Some brands unveiled high-priced new products in Korea first. Tiffany & Co. introduced the 'Tiffany T1 Diamond Choker Necklace,' worth approximately 230 million KRW and released in only three pieces worldwide last month, to Korea first. It sold immediately upon display. Due to the cancellation of the world's largest watch and jewelry fair, Baselworld, some brands like Patek Philippe and Chopard are also introducing multi-hundred-million KRW luxury items to Korea first.

Chanel redirected order quantities initially allocated to duty-free shops to department stores and deployed duty-free shop staff to department store locations to increase customer service personnel. Chanel's sales reportedly more than doubled from March to May.

The reason luxury brands are shifting supplies to the Korean market lies in Koreans' love for luxury goods. Domestic demand for luxury items has continued to increase even after COVID-19. According to Bain & Company's '2020 First Half Luxury Report,' jointly produced with Fondazione Altagamma, an Italian luxury producers' association, the global luxury market in Q1 this year is estimated to have decreased by about 25% compared to the same period last year. Euromonitor also forecasts an 18% decline in the global luxury market this year. In contrast, Korea's luxury market is expected to record its highest-ever performance this year. A distribution industry official explained, "Luxury goods are a product category unaffected by COVID-19," adding, "They have maintained double-digit growth every month." Sales in the luxury category at major department stores?Lotte, Shinsegae, Hyundai, and Galleria?from January to May increased by 9.0%, 17.7%, 23.0%, and 13.0%, respectively, compared to the same period last year. The number of purchases also grew by more than 10% year-on-year.

Hong Hee-jung, Senior Researcher of Beauty and Fashion at Euromonitor, analyzed, "While countries worldwide adopted strict policies such as closing offline distribution channels after COVID-19, Korea was relatively unaffected in distribution," and added, "Korea is regarded as one of the very important countries for overseas brands." She continued, "Although the duty-free channel was hit, the domestic luxury market shows solid demand with a steady increase in consumers, including high-net-worth individuals," emphasizing, "Especially consumers in their 20s and 30s show explosive purchasing frequency compared to the past, highlighting a stronger desire to own luxury goods than other generations." In fact, the luxury purchase trends by age group at Lotte Department Store from January to May this year show sales among those in their 20s and 30s increased by 25.6% and 31.8%, respectively, compared to the same period last year.