LUXURY
market with the opening of its first store at the high-end Shinsegae Department Store located in the bustling area of Gangnam .
CDG by Comme des Garçons also opened its first stand-alone store in South Korea under a partnership with Samsung C & T Fashion earlier this year .
“ Between 2021 and last year , more than 30 fashion maisons , including Celine , Chloe , and Givenchy , have established subsidiaries in South Korea ,” Dominika Kustosz-Lee , co-founder and CEO of Dkl & Company , told Inside Retail . “ This used to be one of those markets with a big reliance on domestic distributors , but luxury brands are switching to directly operated stores .”
The expert shared that the Polène flagship was packed even though she visited the store just a few days after its opening .
The conundrum of slow growth While the pace of luxury brand store openings paints a picture of a booming industry , the growth trajectory of the country ’ s luxury sector seems to tell a different story . Compared with the previous year , growth has slowed down , with some luxury brands reporting a decline in sales due to stalling demand . And , looking ahead , the sluggish gains are expected to be in line with the world ’ s current uncertain economic climate .
French fashion house Chanel posted a 7 per cent increase in sales , to US $ 1.2 billion , last year
– modest growth compared with more than 30 per cent in 2021 and 2022 . Meanwhile , Louis Vuitton ’ s sales dropped 2.4 per cent last year , to 1.65 trillion won , with operating profit falling 31.3 per cent .
Luxury accessories brands , including Rolex , Omega and Bulgari , also reported sales and profit drops last year .
LVMH-owned beauty giant Sephora withdrew from South Korea last month after more than four years in the market , failing to compete with local beauty giant CJ Olive Young .
“ The reason Sephora wasn ’ t able to secure its foothold in the market is because it came here with a formula that worked elsewhere and did little to localise , including consideration for sales channels such as Kakao Gift ,” Kustosz-Lee said .
" This is a very dynamic market , with its own rules , and unless you want to fail , don ' t ignore them . I ' ve been doing business development
40 www . insideretail . asia August 2024