Despite COVID-19 and Cold Wave, Hermes and Louis Vuitton Crowded... "Because It's Cheaper Than Next Year"

Price Increases from Early New Year at Hermes, Louis Vuitton, and More... Stores Crowded Since Last Month
Luxury Brands Plan 2-3 Price Hikes This Year... Open Runs Ongoing

Citizens lined up at the luxury section of Lotte Department Store Main Branch in Jung-gu, Seoul, trying to purchase Chanel bags after hearing the news of a price increase for the luxury brand Chanel.
[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] Luxury brands have been raising their prices continuously since the beginning of the new year. Despite social distancing measures due to the COVID-19 pandemic, heavy snow, and cold waves, luxury stores have been bustling with customers every day. Last year, defying the impact of COVID-19, Chanel and Louis Vuitton stores saw long lines from early dawn for several days, creating a spectacle of "open runs" (the act of rushing to buy items as soon as the store opens). This year, Herm?s opened the floodgates for open runs, followed by Louis Vuitton taking over the baton.

According to the luxury industry on the 10th, Herm?s began raising prices on products sold in Korea starting from the 5th. However, Herm?s plans to increase prices gradually by product category, as the arrival times of products in Korea vary. Overall, prices will rise by up to 10%. Price increases apply across all categories including clothing, bags, and accessories. Earlier, Herm?s raised prices in Europe on the 1st (local time) with an increase rate of 5-10%. Prices of products listed on the official Herm?s Korea online store were all updated as of the 5th. The Picotin (22) bag is priced at 3.85 million KRW, and the Garden Party (36) bag increased by 100,000 KRW to 4.82 million KRW.

Rumors of Herm?s price hikes at the beginning of January led to Herm?s stores being crowded from mid-December. By the end of December, products were sold out at all stores. Choi Ji-yeon (pseudonym) said, "I visited Herm?s stores for year-end gifts, but after hearing the price hike rumors, so many people flocked that the stores were completely empty of stock," adding, "I went around several stores but couldn’t buy a Twilly."

Even after the new year began, Herm?s open runs continue. As the luxury industry’s truth goes, "The luxury item you buy today is the cheapest," products sell out quickly as soon as the price-increased items arrive. The Herm?s customer center is flooded with inquiries about product availability and price increase rates. Products are rapidly sold out on the official online store, with sales updates happening frequently. In luxury communities, information sharing about which stores have certain products is active. Jung So-mi (pseudonym) said, "I called all stores yesterday, but there was no stock of Garden Party and Party Loafer lines, so I haven’t been able to purchase yet," adding, "A seller said it might not be possible to buy in Seoul, but there’s a rumor that the Busan Shinsegae Centum City store has stock, so I plan to check and visit." Jung also added, "Herm?s has been raising prices slightly every early year, so if you want a product, it’s better to buy it this year than next."

Louis Vuitton raised prices on major products by up to about 25% on the 7th. Prices of Monogram canvas products were significantly increased, especially those priced under 1 million KRW saw large hikes.

For example, Louis Vuitton’s "Pochette Accessoires" increased from 780,000 KRW to 980,000 KRW, a 25.6% rise. The Mini Pochette Accessoires also rose from 410,000 KRW to 500,000 KRW, a 22.0% increase. These are popular products known for their cost-effectiveness and sell out immediately upon arrival at Louis Vuitton stores or the official online mall.

The Toiletry pouch series also saw significant price increases. The Toiletry Pouch 19 size surged from 570,000 KRW to 660,000 KRW, a 15.8% jump, and the Toiletry 15 rose from 530,000 KRW to 600,000 KRW, a 13.2% increase. The Toiletry Pouch 26 increased from 640,000 KRW to 710,000 KRW, a 10.9% rise.

The "Multi Pochette Accessoires," which caused a "sold-out frenzy" after its first release in October 2019, increased from 2.31 million KRW to 2.6 million KRW, a 12.6% rise. Additionally, the Monogram Alma BB rose from 1.75 million KRW to 1.82 million KRW, the Speedy Bandouli?re 25 increased by over 50,000 KRW from 2.01 million KRW, and the Neono? Monogram MM slightly increased by 30,000 KRW from 2.21 million KRW to 2.24 million KRW.

Last year, Louis Vuitton raised prices in March and then again in May, just two months later. It also conducted additional price increases on some products afterward. This year, 3 to 4 rounds of price hikes are expected.

Chanel, considered one of the three major luxury brands along with Herm?s and Louis Vuitton, is rumored to raise prices in May. Chanel raised prices twice last year, and Louis Vuitton did so three times. The LVMH group plans to raise prices this year not only for Louis Vuitton but also for Dior, Fendi, Givenchy, Bulgari, and others. Celine has already raised prices as of the 1st. The price increase rate is up to about 15%.

Despite luxury price hikes, consumption shows no signs of slowing down. In fact, although many luxury brands raised prices last year, consumption reached record levels. Sales of luxury goods at Lotte Department Store and Shinsegae Department Store increased by 16% and 26%, respectively, from January to November last year compared to the same period the previous year.