Louis Vuitton just raised prices by up to US$180 in South Korea – where will the French luxury brand squeeze customers next?
The French luxury giant appears to be cashing in as social distancing restrictions are relaxed and Korean shoppers return to malls en masse – will the rest of the world get the same treatment?
Korea Times
Published: 1:00pm, 8 May, 2020
“We have decided to raise the prices starting on May 5. It was part of our pricing policy based on the long-term view. Though, we cannot comment on how much we have increased our prices regarding individual items,” a Louis Vuitton Korea official said.
Louis Vuitton increased its prices twice in 2019, first in February and again in November. The mark-up in March came just three and a half months after the previous price increase but it has never raised prices twice in the first half of the year.
Luxury retailers usually hike prices in four situations. First, when their head office decides to increase prices globally; second, when the exchange rate fluctuates; third, when production costs go up; and lastly, when labour costs rise.
Industry insiders say a bad exchange rate and the shutdown of Louis Vuitton's production lines in France and Italy have pressured the fashion brand to pass the financial burden onto its customers.
However, many consumers have voiced suspicions that the luxury retailer purposely increased the prices when the government relaxed social distancing rules.
In February, while Covid-19 was imposing great economic damage to most bricks-and-mortar retailers, including department stores and hypermarkets, sales at luxury-brand stores actually increased.
The four major department store franchises Shinsegae, Lotte, Hyundai and Galleria all saw increased sales of luxury goods at their outlets. Louis Vuitton watched for its chance and came in right as potential buyers are hitting stores again.
Again, an official at Louis Vuitton Korea failed to give an answer as to why their head office decided to raise prices at this particular moment.
Some customers said they feel dumbfounded and angry that the French fashion house did not give advance notice of the planned price rises to the public. This time, Louis Vuitton Korea did not even advise its sellers at department stores about the price hike until the day it started.
The prices of two popular handbags, the Speedy Bandouliere 30 and Bandouliere 35, have increased by 100,000 won (US$82) each. Another steady-seller, the Ontergo MM's price also rose by 170,000 won (US$138) while Mini Dauphine's price rose by 220,000 won (US$180).
While handbag prices have increased by 5 to 6 per cent, clothing prices rose by up to 10 per cent.
Louis Vuitton failed to issue any comment when asked if it only decided to increase prices in Korea or if price rises will apply to other countries as well.
Korea Times/South China Morning Post
