|▲ A long line in front of a Chanel store (http://www.busan.com/view/busan/view.php?code=2020051311503127920)|
On May 14th, when the French luxury brand Chanel announced its price increase, a rush for Chanel products took place in department stores across the country. People lined up at the stores, and jumped into the store as soon as the doors opened. People waited in line for several hours before the stores opened and even used annual work leave hours. A rush for luxury products is often seen when luxury companies raise prices. Luxury consumers say, "It's cheaper to buy now." This is because luxury brands increase prices every year. So, the term 'Chatech' (Chanel + Jaetech) also comes up. Jaetech means financial technology. In fact, in the luxury information community Chicment, you could see that new products purchased from a rush for luxury goods sell at a higher price.
This year luxury brands such as Bulgari, Rolex, Louis Vuitton, Celine, and Tiffany raised prices. In the case of Louis Vuitton, prices increased by 6-10% in November of last year, and in March and May of this year. Luxury goods makers say they have to raise prices for reasons such as exchange rate fluctuations and rising costs of raw materials, but they do not lower prices after a drop in exchange rates. Indeed, major department store luxury goods sales increased by more than 10% from the same period last year, despite COVID-19.
In economics, the relationship between demand and price is inversely proportional. However, the more expensive luxury goods are, the more consumers want to buy it. This is called the Veblen effect. The Veblen effect was popularized in the American sociologist Veblen's book 'Limitary Class Theory'. The theory states that demand increases when consumers want to show off or indulge their vanity. He argues that people show off luxury goods because it implies that by owning more expensive items that the consumer lives well, or has a ‘high quality life’.
The advent of social media influenced the increase in consumption of luxury goods. The proliferation of social media, a space that can maximize exhibitionism, played an important role in the growth of the luxury market. Millennials, the generation born between the early 1980s and early 2000s, Millennials lined up to buy luxury goods and put them on social media. According to a survey on Univtomorrow 20th Research Institute, when Millennials and Gen Zs were asked about the consumption of fashion luxury goods, 48.4% answered, “I want to buy famous luxury goods that everyone knows.” Millennials pursue a “YOLO” (you only live once) philosophy and show off their consumption by posting photos of luxury goods on social media. According to a report by Samsung Securities, the dependence of luxury brands on Millennials is increasing. Already in 2017, Gucci and Prada earned more than half of their sales and Saint Laurent earned 65% of its sales from Millennials.
Then there is flex culture. ‘Flexing’ is a hip-hop term that means to show off wealth and valuables. As Korean hip-hop singers flexed luxury brands through song lyrics and social media, this naturally influenced younger generations. In particular, teenagers have a strong desire to be recognized and stand out from their peers, sometimes leading to theft and fraud cases. In March 2019, a teenager stole a smartphone from a jjimjilbang and paid a premium of 33 million won. Meanwhile, the Millennial generation is also called Smasumer (smart+consumer), which gets enough information from smartphones and makes practical purchases based on the price and quality of products. They buy the luxury items that they want when choosing what to buy. The rest of the items that make up a substantial part of consumption are carefully weighed based on cost-effectiveness.
Korean society is moving towards being a society that prefers, consumes, and shows off luxury goods. Buying luxury goods is a personal choice that people can make for their own self-satisfaction. Therefore, students who buy luxury goods through part-time jobs should not be criticized recklessly. However, the atmosphere in Korea, where luxury goods are casually bought, should not be taken lightly. Young students are easily swept away by social pressure and trends. Therefore, if this trend towards luxury goods continues, teenagers could grow up with a sense of deprivation and defeatism from an early age and it could escalate into becoming a serious social problem. Hence, it is necessary to be careful.
By Choi Yuri, cub-reporter email@example.com
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