Luxury brands continue price markups in South Korea this year

[Source : Hermes]

Luxury brands operating in South Korea have raised or plan to raise prices again this year on rising material costs and currency fluctuations, following a sharp markup last year.

According to sources on Monday, Rolex, a Swiss luxury watch brand, raised the prices of major models such as the Submariner and the Datejust by 2 to 6 percent on Jan. 1. Its popular model Rolex Submariner No Date has a new price tag of 11.69 million won ($9,205), up 2.4 percent from 11.42 million won, and the Submariner Date Blue (Combi) is now priced at 20.03 million won, up 6 percent from 18.81 million won. The watch brand raised the price of its popular models by 8 to 16 percent just a year ago.

Hermes, another luxury brand, will raise the price of its bags and clothing by up to 15 percent on Wednesday. The French high-fashion house has raised prices every January and heralded a 5 to 10 percent price hike for this year during a third-quarter earnings conference call last year. In January of last year, prices of Hermes handbags, purses and scarves were raised by 3 to 10 percent.

Other luxury brands such as Delvaux, Chopard and Breguet are expected to join price hikes early this month.

It is nothing new for luxury brands to raise their prices. Last year, most luxury brands raised prices. Some raised prices several times a year like Chanel. The luxury handbag and clothing brand raised the price four times last year.

Despite the price hikes, demand for luxury goods is not expected to cool down anytime soon. The local department store industry reaped huge profits thanks to strong sales of luxury goods and fashion items despite a decline in overall consumer sentiment due to high inflation.

Lotte Department Store’s sales jumped by 17.3 percent to 768.9 billion won, with an operating profit of 108.9 billion won in the third quarter of last year. Sales of Shinsegae Department Store soared by 19.8 percent to 609.6 billion won, and operating profit skyrocketed 50.5 percent to 109.4 billion won during the same period. Hyundai Department Store also saw its revenue grow by 13.2 percent to 560.7 billion won, with operating profit up 64.6 percent to 96.5 billion won.