Longchamp over LV: Economy, trends shift shoppers toward mid-range luxury

The luxury market is trending toward mid-range goods after ultraluxury products flew off the shelves as shoppers treated themselves during the pandemic era.

Models hold French fashion house Longchamp's flagship foldable bag Le Pliage in an ad. [LONGCHAMP]

The luxury market, once polarized between high-end and low-end products, is undergoing a shift toward the mid-range as demand for ultraexpensive luxury goods is declining in favor of mid-luxury items.

Recent data from the Ministry of Trade, Industry and Energy shows that the domestic luxury market, which experienced significant growth during the Covid-19 pandemic as consumers indulged in ultraluxury purchases, is now experiencing a downturn.

The sales of posh labels at department stores nationwide declined by 11 percent in July compared to the same period last year, marking the first double-digit decrease since March 2020 when the entire nation was under lockdown due to the Covid-19 pandemic, a fall that reversed course to post expansive growth that year and the next.

While increased overseas travel has been cited as a contributing factor, the primary reason for this decline is weakened consumer sentiment due to soaring inflation and a decrease in luxury goods purchases among people in their 20s and 30s, who are showing a preference for mid-range luxury goods that have inspired social media trends.

A Loius Vuiton store on the first floor of The Hyundai Seoul, Yeongdeungpo District, western Seoul. [HYUNDAI DEPARTMENT STORE]

Faced with declining popularity, some luxury brands are lowering the prices of their products, a measure considered taboo in the luxury industry. Burberry has slashed its prices by approximately 20 percent, while Yves Saint Laurent has reduced its prices by 3 to 15 percent. On the other hand, more affordable luxury brands are now stepping in on the back of growing popularity among individuals who are tightening their belts due to the stagnant economy.

The resurgence of Coach New York exemplifies this trend, with its parent company Tapestry reporting net sales of more than $6.6 billion for three consecutive years starting in 2022, an approximately 16 percent increase from the year before. This contrasts with the decline in sales of luxury goods companies such as LVMH and Gucci's parent company Kering, which saw drops of 1 percent and 11 percent, respectively, in the first half of the year compared to the same period last year.

Coach's resurgence began with the launch of its environmentally friendly program called "re-loved," which allowed customers to upcycle their forgotten, dust-laden bags into stylish, monogrammed shoulder bags. The program quickly dovetailed with the brand's younger demographic, who enthusiastically shared their refurbished accessories on social media platforms like TikTok.

Another mid-range brand that has gained traction is the French fashion house Longchamp. The popularity of its iconic Le Pliage foldable bag drove a 44 percent year-over-year increase in revenue in 2023.

U.S. designer brand Tory Burch has also emerged as a notable player in the mid-range luxury market. According to the fashion search engine LYST, searches for Tory Burch increased by 15 percent in the third quarter of 2023, largely due to the success of its pierced mule shoe. This popularity has led to the coining of the term “new Burch era.”

BY YOO JI-YOEN [yoon.seungjin@joongang.co.kr]