25 November 2021, Mumbai:
While Covid restricts travel and duty-free shopping, South Koreans are fueling a luxury goods boom at home, with Chanel excluding roughly a third of would-be customers in order to prevent bulk buyers from snatching $10,000 bags for resale at markups of 20% or more.
Traffic to the legendary French fashion and luxury company's South Korean stores has decreased after it began screening clients it suspected of stocking up just to resell to others in the secondhand market.
"After analyzing their purchasing patterns, we were able to identify them (bulk purchasers). Since the implementation of this restriction, traffic in our boutiques has reduced by 30% "recent," Chanel said in a statement to Reuters.
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It didn't say how it determined those consumers were prospective bulk purchasers, and the privately held company doesn't break down sales by nation.
Chanel's plan, which has been in effect since July of last year, coincided with a recovery in worldwide demand for luxury products following the worst of the coronavirus epidemic.
South Korea is the world's seventh-largest luxury goods market, and it was one of just two of the top seven economies by revenue - the other being China - to have sales increase from 2019 levels last year.
With limited internet purchasing options beyond cosmetics, fragrances, and a few tiny accessories, supply at labels like Chanel is closely managed, preserving exclusivity and promoting attractiveness.
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Long lines develop outside department shops before daybreak in downtown Seoul, as consumers prepare for what's known as an 'open run,' a dash to Chanel's doors at opening time.
"I came... at 5.30 a.m. for an open run and was told there were more than 30 people in front of me," a shopper in front of a Chanel outlet in Seoul told Reuters.
Because of privacy concerns, he spoke on the condition of anonymity. He stated the item he sought was sold out by the time he visited the store, which was approximately 10 hours later.
A Chanel medium classic flap bag was sold for 13.5 million won ($11,031) in January on KREAM, a portal that sells everything from shoes to tech and luxury items and is an offshoot of tech giant Naver Corp., demonstrating the resale market's ferocious demand. KREAM, which stands for 'Kicks Rule Everything Around Me,' was released in the year 2020.
It told Reuters that in December, monthly transactions surpassed 100 billion won, and that the resale market in South Korea is worth more than 1 trillion won, or roughly $820 million, even by conservative estimates.
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CREDITS: Reuters Euromonitor & Fashion Network.
