SEOUL, Jan. 24 (Korea Bizwire) — South Korean consumers are up in arms over luxury brands that are pushing up prices seemingly arbitrarily in recent days as a way to stimulate buying sentiment.
French fashion company Chanel suddenly raised the price of some handbag items by up to 17 percent on Jan. 14. This price hike came just two months after price increases in November last year .
The high-end fashion brand also increased prices in July.
Prada pushed up its prices a total of six times last year. It raised the price of bags by 5 to 10 percent in December.
Luxury brands claim that these are not arbitrary price hikes but price adjustments reflecting the change in foreign exchange rates and tariff levels.
These practices, however, stir up resentment among local consumers, who claim that the frequency of price adjustments is excessive and the price hikes are disproportionately high.
Some say that luxury brands are abusing the Veblen Effect, which refers to abnormal market behavior in which consumers want to purchase higher-priced goods.
After being tamed by these tactics and price hikes, some consumers are even opposed to luxury brands lowering their prices.
Italian luxury brand Fendi faced strong customer opposition when it lowered the price of its best-selling medium-sized Baguette Bag from 3.98 million won (US$3,330) to 3.75 million won early last year.
Some of its customers protested that they purchased the items at a high price without the expectation that the price could go down.
Another factor that distorts the price of luxury items in recent days is the boom of ‘resellers’ who buy luxury items and resell them for a higher price to ordinary consumers. The number of resellers is increasing on the back of the growth of luxury consumption.
Ashley Song (firstname.lastname@example.org)