According to recent earnings reports, the luxury fashion market in Korea, which experienced a boom during the COVID-19 pandemic, is now showing signs of slowing down.
Sales growth for expensive luxury products had soared in previous years, driven by changing consumer behaviours during the pandemic. However, the momentum began to wane last year as economic uncertainties persisted, leading to a decrease in consumer confidence.
Chanel, the leading French fashion house, reported sales of 1.7 trillion won ($1.2 billion) in Korea last year, marking a 7% increase from the previous year. Despite outpacing its French rival Louis Vuitton to become Korea’s best-selling luxury brand, Chanel experienced a slowdown compared to the over 30% growth in sales it enjoyed in 2021 and 2022. Operating profits for Chanel also declined by 34% year-on-year.
Louis Vuitton Korea, on the other hand, posted negative growth in both sales and operating profits last year. After achieving significant growth rates of 40% and 15% in 2021 and 2022, respectively, the brand’s sales decreased by 2.4% to 1.65 trillion won in 2023, with operating profits plunging by 31.4%.
Christian Dior reported a 12% increase in sales last year, exceeding the 1-trillion-won mark for the first time. However, this growth rate was lower compared to the 51% surge in 2022.
Among the top luxury brands in Korea, Hermes was the only company to report growth in both sales and operating profits last year. Celine and Rimowa also showcased rapid growth, with Celine Korea’s annual sales in 2023 increasing by 513% and Rimowa Korea’s annual sales rising by 77%.
The challenging market conditions have also affected sales and profits of luxury accessory brands like Rolex, Omega, and Bulgari, which saw significant drops last year.
As the luxury market in Korea faces headwinds, brands are recalibrating their strategies to navigate the evolving landscape and reignite growth in this competitive sector.
