Chanel is taking action to address the concerning trend of bulk buyers in South Korea who purchase luxury goods, specifically handbags, with the intention of reselling them at inflated prices. The renowned French fashion and luxury company has observed a decline in boutique foot traffic since implementing measures to identify potential resellers. While Chanel has not disclosed the specifics of its screening process, it has revealed that its boutiques have experienced a 30% decrease in visitor numbers since the implementation.
South Korea currently ranks as the world’s seventh-largest luxury goods market, and despite the challenges brought by the Covid-19 pandemic, it has witnessed continued growth in luxury goods sales. Chanel’s strategy of exerting tighter control over supply not only works to maintain exclusivity, but also fuels high demand for their products. This has resulted in long queues forming outside their stores during “open run” events. The resale market for luxury goods, particularly Chanel, is thriving in South Korea, with platforms like KREAM reporting monthly transactions surpassing 100 billion won.
Recognizing the significance of the resale market, Chanel has introduced a “queue management system,” necessitating customers to provide their contact details and reason for visiting the boutique to receive a text message notification of their entry time. However, opinions regarding the impact of this new buying pattern on Chanel are divided. Some argue that long queues and the buzz created on social media contribute to the brand’s popularity among younger customers. On the other hand, some potential customers feel discouraged by the difficulties encountered in purchasing Chanel products.
Despite conflicting views, bulk buyers and resellers persist in the market, implementing various tactics like enlisting “line standers” to wait in queues and buying up limited inventory to maximize profits. The resale market for Chanel products in South Korea is estimated to be valued at over 1 trillion won.
In conclusion, the booming luxury goods market driven by domestic demand poses both challenges and opportunities for Chanel and other luxury brands operating in South Korea. While bulk buyers and resellers pose a threat to the original distribution channels and pricing structure, they also highlight the brand’s desirability and generate excitement among consumers. Chanel’s efforts to combat these challenges reflect their commitment to maintaining exclusivity and ensuring a positive shopping experience for genuine customers.
Useful links:
Chanel Official Website
KREAM – Resale Platform for Luxury Goods
