May 29, 2022
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Handbags at dawn: Chanel duels South Korean resellers in luxury boom

Individuals queue to enter the Chanel boutique at a division retailer in Seoul, South Korea, Could 13, 2020. — REUTERS/MINWOO PARK

SEOUL — As COVID curbs reduce journey and duty-free purchasing, South Koreans are driving a luxury items boom at dwelling that has left Chanel barring almost a 3rd of would-be consumers to cease bulk patrons snagging $10,000 baggage for resale with markups of 20% or extra.

The storied French vogue and luxury firm informed Reuters it has seen visitors to its boutiques in South Korea skid because it started screening for patrons it believed is perhaps stocking up purely to flip to others in the resale market.

“We were able to identify them (bulk buyers) after having analyzed their buying patterns. Since this policy was implemented, the traffic in our boutiques has decreased by 30%,” Chanel informed Reuters in an announcement. It didn’t disclose precisely the way it deemed these clients to be potential bulk patrons, and the privately owned enterprise doesn’t disclose gross sales numbers by nation.

Chanel’s technique, carried out since July final yr, got here as world demand for luxury items was selecting up after the worst of the coronavirus pandemic. South Korea is the world’s seventh-biggest luxury items market in keeping with Euromonitor, and the analysis agency estimates it was certainly one of solely two of the highest seven markets by income — the opposite being China — to see gross sales develop final yr from 2019 ranges.

Provide at manufacturers like Chanel, although, is tightly managed, preserving exclusivity and boosting attraction with no on-line purchasing possibility past cosmetics, perfumes and a few small equipment. Such is the urge for food in downtown Seoul that lengthy queues type earlier than daybreak exterior shops as consumers brace for what’s often known as an ‘open run’ — a dash to Chanel’s doorways at opening time.

“I arrived … at 5.30 a.m. for an open run and I was notified that there were more than 30 people in front of me,” a consumer informed Reuters in entrance of a Chanel boutique in Seoul. Talking on situation of anonymity due to privateness issues, he stated by the point he entered the shop — almost 10 hours later — the merchandise he needed was offered out.

Reflecting such red-hot demand in the resale market, a Chanel medium basic flap bag was offered at 13.5 million gained ($11,031) — 20% greater than its commonplace retail worth — in January on KREAM, a platform providing all the things from sneakers to tech and luxury items that’s an affiliate of tech big Naver Corp.

KREAM, an acronym for ‘Kicks Rule Everything Around Me’, was launched in 2020. It informed Reuters its month-to-month transactions exceeded 100 billion gained in December, and stated South Korea’s resale market is value greater than 1 trillion gained — almost $820 million — even at essentially the most conservative estimates.

Whereas resale platforms like KREAM provide a spread of manufacturers, Chanel, like Swiss watchmaker Rolex, is a very sought-after model due to its standing amongst {couples} in South Korea as one of the vital standard wedding ceremony presents, and frequent worth will increase of its most iconic purses.

Chanel elevated costs of some purses, equipment and seasonal ready-to-wear earlier this month in Asia and Europe, together with by 5% in South Korea — the place costs have simply been raised for the fifth time in 9 months, in keeping with Chanel Korea.

In tandem with its screening for bulk patrons, Chanel stated it has carried out a “queue management system”: Purchasers are requested to provide their contact quantity and cause for visiting the shop in order that they are often knowledgeable through textual content messages when they’ll be capable of enter the boutique.

Model consultants and shoppers are divided on the impression of the brand new shopping for sample on Chanel.

“Consumers are voluntarily doing free ads for Chanel — camping outside (boutiques), doing open runs, posting their experiences on social media,” stated Lee Eun Hee, a professor of shopper science at Inha College.

“I think all those phenomena have helped Chanel draw younger customers and make a big chunk of money off it.”

Nonetheless, some shoppers say lengthy queues and ready lists have put them off.

“I just gave up buying a Chanel product long ago,” stated a Seoul resident in her 30s, declining to be named attributable to privateness issues.

“It’s too difficult to buy one, with some 300 people usually on a waiting list, and by the time it’s my turn, there is no product left. This really puts me off and I don’t want to be at the center of this craziness.”

Not giving up any time quickly are the majority buyer-resellers.

Talking on situation of anonymity due to the sensitivity of the matter, some resellers informed Reuters they’re hiring “line standers” for a payment of as much as $125 a day to face in queues or enter shops on their behalf.

One reseller in his 30s informed Reuters he’s been reselling his purchases at normally greater than 20% revenue — and it may be much more worthwhile when stock degree is low.

He stated he offered a Chanel flap card holder lately on secondhand market app Karrot for almost 1 million gained, 40% above its retail worth — 5 minutes after it went up on the market. — Reuters

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