Publication date and time: September 26, 2024 06:00
The luxury market, which was once polarized between high-end and low-priced items, is shifting toward the mid-price range as demand for ultra-expensive luxury items declines and mid-to-high-end items are preferred.
The country’s luxury goods market, which saw significant growth during the COVID-19 pandemic as consumers rushed to buy ultra-luxury items, is now in a slump, according to the latest data from the Ministry of Industry, Trade and Resources.
Sales of luxury brands at department stores nationwide fell 11% in July compared with the same month a year earlier, the first double-digit decline since the COVID-19 pandemic put the country under lockdown in March 2020. Sales then bounced back to strong growth this year and the following year.
Increased international travel is cited as one factor, but the main reasons are weakening consumer confidence due to soaring inflation and a decline in luxury purchases among people in their 20s and 30s who are favoring mid-priced luxury items influenced by social media trends.
Faced with declining popularity, some luxury brands have begun slashing prices, a move that is considered taboo in the luxury industry: Burberry has slashed prices by about 20%, while Yves Saint Laurent has cut prices by 3% to 15%. Meanwhile, more affordable luxury brands are also entering the fray, as their popularity grows among thrift-conscious individuals amid the economic downturn.
Coach New York’s return is emblematic of this trend, with parent company Tapestry reporting a third consecutive year of net sales of more than $6.6 billion, up about 16% from a year ago, starting in 2022. This contrasts with declining sales at luxury companies such as LVMH and Gucci parent Kering, which saw declines of 1% and 11%, respectively, in the first half from the same period a year ago.
Coach’s revival began with the launch of “Re-Loved,” an eco-friendly program that allows customers to transform forgotten and dusty bags into stylish monogrammed shoulder bags. The program was quickly embraced by the brand’s younger demographic, who eagerly shared their refurbished accessories on social media platforms like TikTok.
Another mid-priced brand gaining popularity is French fashion house Longchamp, which is seeing a 44% increase in revenue in 2023 compared to the previous year, driven by the popularity of its iconic foldable bag, Le Pliage.
American designer brand Tory Burch has also been a hot topic in the mid-luxury market: According to fashion search engine LYST, searches for Tory Burch are up 15% in the third quarter of 2023, mainly due to the success of its pierced mule shoes. This popularity has given rise to the term “the new Burch era.”
BY YOON JI-YOUNG (yoon.seungjin@joongang.co.kr)