French fashion brand Chanel will raise handbag prices in Korea again. Chanel decided to hike the prices of popular handbag lines such as Classic and Vintage 2.55 by about 10 percent as of Feb. 1. The price of Vintage 2.55 Large bags will go up a whopping 11 percent from W6.63 million to W7.4 million (IS$1=W1,137).
This is the first time that a Chanel handbag is priced at over W7 million.
A Chanel executive said not all prices but only a few of its bestselling items will increase. "We decided to raise prices en bloc in the wake of the price hike at our headquarters in France," he added. Chanel stores in Europe hiked the prices of Classic and Vintage bags by about 7-10 percent on Wednesday.
Chanel raises the prices of major handbag lines by about 20-30 percent a year. A Vintage Large bag cost W3.34 million in April 2008 but that had doubled to W6.63 million last December.
Immediately after the Korea-EU free trade agreement took effect in July last year, Chanel's prices in Korea dropped by about 3 percent. But consumers did not really benefit from the FTA because Chanel had already hiked prices by as much as 25 percent in May that year, right before the trade deal went into effect.
Some Chanel handbags have even been in short supply as traders and some savvy customers are hoarding them in expectation of the next price hike. A fashion industry insider said, "Chanel is raising prices several times a year under the pretext of a rise in raw materials prices. The company seems to have confidence that consumers will buy its products under any circumstances."
But another insider pointed out that there are some women and upscale customers regard Chanel handbags as a must-have, and demands for such bags are likely to be even higher ahead of spring, the peak wedding season. "It's hard enough to accept that luxury labels raise prices several times a year, but what is more problematic is that customers spend recklessly due to their label addiction," she added.