[Luxury World] Cartier's Iconic Watches Surpass 20 Million Won... Luxury Brands Stand Firm Amid Economic Downturn

Relay of Price Hikes in the Luxury Sector at the Start of the Year
Luxury Brands Expected to Post Record Results in South Korea This Year

From the very beginning of the new year, global luxury brands have been raising their prices across the board in South Korea. Major brands such as Chanel, Hermes, and Rolex have initiated price hikes, with Cartier and Prada also joining the wave of early-year increases. Despite a slowdown in domestic consumption due to high interest rates and inflation, the luxury sector stands out as an exception, repeatedly raising prices.

According to the industry on February 1, Cartier recently implemented a uniform price increase for its major products in South Korea, excluding eyewear. The "Tank Must de Cartier Watch Small (W4TA0031)" rose by 8.0%, from 9.35 million won to 10.1 million won, while the "Tank Louis Cartier Watch Small (WGTA0010)" increased by 7.9%, from 18.9 million won to 20.4 million won. The "Tank Americaine Watch Small" and the "Baignoire Watch Mini" also saw price hikes of around 8% each.

Price Hikes Across the Board, from Cartier to Hermes

Jewelry and perfume prices were also adjusted simultaneously. Key jewelry items such as the Love Unlimited Ring, D'Amour Pendant, and Clash de Cartier Bracelet saw increases in the 7-8% range, while the perfume "Baiser Vol? Eau de Parfum" rose by over 17% for some products. News of the price hikes triggered a surge in online orders, causing delivery delays and a short-term spike in "pre-increase demand." Lines also formed in front of offline stores before opening hours.

Prada also raised domestic prices, focusing on its bags. The Re-Nylon Re-Edition 2005 Mini Bag increased by about 3%, from 1.69 million won to 1.74 million won, while the Galleria Small and Large Leather Bags each rose by around 2%. The Duet Re-Nylon Bucket Bag also saw a price increase. Although the rate of increase was lower than Cartier's, the key point is that price adjustments are spreading across the sector, not limited to specific brands.

Luxury industry price hikes have continued since the start of the year. Earlier, Chanel raised prices on some products, including bags, on January 13, with the Classic Maxi Handbag surpassing 20 million won at 20.33 million won. Hermes increased the price of its Silk Scarf 90 by 12.5% earlier this month, and Rolex also adjusted its prices on New Year's Day. Jewelry brand Tiffany & Co. is also reportedly considering a price increase next month.

Yonhap News Agency

Annual "Nth Price Hikes" Cited as "Cost Increases"... Stimulating the Psychology of Scarcity

The luxury industry cites rising raw material costs, exchange rate fluctuations, and global pricing policies as reasons for the price hikes. They explain that price adjustments based on European headquarters and the "price harmonization" strategy to reduce international price gaps are both at play. However, many in the market believe that the frequency and magnitude of the increases are excessive to be explained solely by cost factors. Brands that raised prices multiple times last year are again adjusting prices at the start of the new year.

This stands in stark contrast to general consumer goods. While the food and restaurant industries are wary of public and political backlash even for 100 or 200 won increases, luxury brands raise prices regardless of economic conditions. Paradoxically, as prices rise, demand is not dampened but rather stimulated by the sense of "I have to buy now."

In fact, the domestic luxury market continues to grow. The size of the South Korean luxury market surpassed 20 trillion won last year, showing an average annual growth rate of 10%. This is double the level of the early 2020s, ranking third in Asia. Demand from high-income and wealthy top-tier consumers remains strong, and diversified spending by foreign tourists from Japan, Southeast Asia, and the Middle East is also providing support.

An industry insider explained, "South Korea is a relatively low-risk market for global luxury brands to test price increases. The core customer base has strong purchasing power, and it has been repeatedly confirmed that sales recover quickly even after price hikes."

Luxury Companies' Domestic Earnings Soar... Overseas Markets Show Fatigue Over Price Hikes

Price increases for luxury products are immediately reflected in performance. Even if sales volumes decrease slightly, higher average transaction values offset this. In fact, the Korean subsidiaries of the so-called "Erusha" trio-Hermes, Louis Vuitton, and Chanel-which raised prices more than twice in 2024, recorded combined sales of about 4.6 trillion won in South Korea in 2024. According to each company's audit report, Hermes Korea posted sales of 964.3 billion won and operating profit of 266.7 billion won in 2024, up 21% and 13% year-on-year, respectively. During the same period, Louis Vuitton Korea's sales grew 5.9% to 1.7484 trillion won, and operating profit surged 35.7% to 389.1 billion won. Chanel Korea also saw sales rise 8% to 1.8446 trillion won, and although operating profit slightly declined to 269.5 billion won, it still maintained high profitability.

Many of these brands achieved record results last year or are expected to surpass them this year. In particular, ultra-high-end brands like Hermes and Chanel tend to have a limited but highly loyal customer base, resulting in relatively weak price resistance.

However, in global markets, fatigue over luxury price hikes is gradually accumulating. Some brands are experiencing sluggish sales, increasing discounts and outlet sales, and the rapid growth of the secondhand and resale market is part of the same trend. Another industry insider commented, "Luxury goods have become a separate consumption sector, largely unaffected by the economy, but attracting new customers may become more challenging. While short-term results may be maintained, it is difficult to rule out the possibility of slower growth in the medium to long term."