Summary:
- Aicel Technologies’ Korea Luxury Index shows a decline in luxury consumption, driven by economic downturns and shifting consumer behavior.
- Hermes (RMS:FP) defies the trend, posting resilient growth compared to Louis Vuitton (LVMH:FP) and Chanel.
- Online luxury platform sales—tracked by Aicel Technologies’ Online Luxury Platform Index—have contracted significantly, with Trenbe and Mustit losing market share.
- GUGUS, a second-hand luxury retailer, reports impressive growth.
Decreasing Korean Luxury Index: A Sign of Declining Consumption
The Korea Luxury Index—an indicator tracking the combined monthly sales of Hermes (RMS:FP), Louis Vuitton (LVMH:FP), and Chanel—points to a downward trend since peaking during the pandemic. This decline suggests that the luxury market in South Korea is facing reduced consumer spending due to a recessionary economic environment. The post-pandemic correction in consumption behavior reflects a broader tightening of discretionary spending across key sectors, including fashion and high-end goods.
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Sales Trends Among Luxury Brands: Hermes Emerges as a Resilient Outlier
Despite the general decline in luxury consumption, Hermes appears to have achieved robust sales growth, a sharp contrast to the performance of its peers. Louis Vuitton seems to be facing the steepest drop in consumer transaction, with Chanel experiencing moderate losses.
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This divergence seems to highlight Hermes’ brand strategy of maintaining product scarcity and targeting affluent demographics that are less affected by economic downturns. The exclusivity of Hermes' products, such as the iconic Birkin and Kelly bags, may help the brand to retain consumer loyalty and demand, even in adverse market conditions.
Online Luxury Platforms Face Market Contraction
During the pandemic, online luxury platforms witnessed explosive growth, reflecting the shift to e-commerce as consumers sought luxury goods from the safety of their homes. Aicel Technologies’ Online Luxury Platform Index, which tracks sales from platforms like Balaan, Mustit, and Trenbe, confirms a rapid reversal of this trend as the market has contracted significantly.
Trenbe and Mustit—previously in second and third place—now report amplified declines in their market share. This contraction suggests intensified competition within the sector, particularly as consumers scale back luxury purchases or seek alternative buying channels.
The Rise of Second-Hand Luxury: GUGUS Gains Market Share
A notable outlier in the current downturn is GUGUS, a second-hand luxury platform with both online and offline operations. Its recent consumer transaction volumes are now comparable to those of Balaan, the market leader in online luxury retail.
The rise of GUGUS indicates that items purchased in bulk during the pandemic—when luxury consumption peaked—are now reappearing on the secondary market. The growing preference for second-hand goods reflects shifting consumer attitudes toward value and sustainability, as well as a desire to liquidate assets in uncertain economic times.
Conclusion: Diverging Paths in Korea’s Luxury Market
The downturn in Aicel Technologies’ Korea Luxury Index points to reduced consumption across traditional luxury segments, with brands like Louis Vuitton and Chanel struggling more than Hermes, which continues to thrive by catering to high-net-worth consumers.
Similarly, while online luxury platforms face steep declines, second-hand luxury platforms such as GUGUS are gaining momentum, signaling a shift in consumer behavior toward value-focused purchases. These trends underscore the importance of diversifying strategies in a rapidly evolving market environment.
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