February 17, 2022 12:45
Louis Vuitton has hiked prices yet again as pent-up demand in the coronavirus pandemic has increased insatiable appetite for luxury labels.
The French luxury brand increased the prices of all handbags by eight to 26 percent on Wednesday. Now a medium-size handbag in its Capucine line costs a cool W9.22 million, up a whopping 22.4 percent (US$1=W1,198).
Chanel, Dior, Burberry and other luxury brands also raised prices earlier this year amid surging demand as rich consumers had fewer things to spend their money on in the pandemic.
But in the secondhand market prices have been declining due to a sharp increase in supply.
The last time Louis Vuitton hiked prices was only last October, the fifth time in just a year. Rolex, Chanel and Dior raised their prices by 10 to 22 percent last month, and Prada followed suit this month by hiking prices by up to 11 percent.
The companies claim the price hikes are due to rising logistics and personnel costs, but the actual increases are much higher.
Price hikes are now the main reason behind improved earnings at luxury goods companies. LVMH, which owns the Louis Vuitton, Dior, Celine and Fendi brands, achieved 64.2 billion euros in sales and 12 billion euros in net profit last year, even better than before the pandemic.
But the price of a used Chanel classic medium handbag on the platform Kream, which sells limited-edition goods, fell from W14 million in January to W11.4 million on Wednesday. Louis Vuitton's Pochette Accessoires Monogram bags fell from W3.5 million in early January to around W3 million this month.
The market for secondhand luxury goods has fueled demand by enabling purchasers to resell limited-edition goods later at even higher prices, leading to buyers camping out in front of luxury stores overnight to snap up limited editions as soon as they hit store shelves.
But the glut of luxury products in the resale markets has triggered a price decline. One owner of a company selling used luxury products said, "Chanel and Louis Vuitton fetched higher prices on the secondhand market, but they're dropping now. The excessive demand for luxury goods ended up lowering their value."
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