| YOOX's special store opened on Lotte ON / Courtesy of Lotte Shopping |
By Kim Jae-heun
International luxury goods makers are strengthening partnerships with Korean e-commerce firms to attract more young consumers shopping online as sales at department stores and other offline channels decrease, according to industry officials, Thursday.
According to Statistics Korea, sales of popular luxury brands at Lotte, Shinsegae and Hyundai inched down 0.6 percent in the first quarter of this year from the previous year. It is the first time in eight years that luxury goods sales have fallen since the first quarter of 2015 when they contracted 0.8 percent.
During the three-year COVID-19 pandemic, Koreans spent big sums of money on high-priced items because they couldn't travel abroad or engage in social activities. But since Korea started moving toward an endemic phase earlier this year, sales of luxury goods at department stores and flagship boutiques have continued to decline as people spend their money elsewhere.
To help bolster their faltering performance, many international luxury firms have started to go online, which goes against their longtime corporate philosophy, which is to stick to offline sales.
Piaget, a Swiss luxury watchmaker, launched its new Polo Chronography watch at SSG.com for the first time anywhere in the world, Tuesday. SSG.com is an e-commerce subsidiary of local retail giant Shinsegae.
SSG.com has previously sold two of Piaget's products on its online platform with the official approval of the Swiss watchmaker. But this is the first time that its headquarters offered to introduce a new item in collaboration with the e-commerce firm.
“After Piaget saw notable achievements with the online sales of its two watch items on SSG.com, it has decided to launch its new product exclusively on our platform,” an SSG.com official said. “Luxury companies are not only aiming to increase sales through online channels but also attract young future customers, who are comfortable purchasing luxury goods online.”
Piaget opened its first official domestic online store at SSG.com in 2021 together with Panerai, another flagship brand under the mother company Richmont Group.
Polo Chronograph is available exclusively at SSG.com until the end of this month and will be available at department stores from September.
| Swiss luxury watchmaker Piaget's Polo Chronograph sold on SSG.com / Courtesy of SSG.com |
International online fashion retailers such as YOOX Net-a-Porter Group (YOOX) and Catch Fashion have joined hands with Lotte Group's e-commerce platform Lotte ON.
Under the parallel import system, YOOX and Catch Fashion have opened their online store at Lotte ON to target local consumers, who are looking for fashion items that are not available for sale in Korea. Often, the price of luxury goods sold on fashion retail websites are cheaper as they don't come with a warranty card.
| Promotional poster of Catch Fashion's luxury item available on Lotte ON / Courtesy of Lotte Shopping |
YOOX is currently selling some 500,000 fashion items of luxury brands such as Gucci, Prada and Burberry on the Lotte ON website. The e-commerce firm is breaking its all-time high sales every month thanks to its collaboration with YOOX and Catch Fashion. Its luxury goods sales in June have more than doubled, year-on-year.
“Luxury firms' sales here are said to have declined but that is the case for S-rated brands like Channel. The luxury goods that we sell on Lotte ON are contemporary brands that are not too expensive. YOOX and Catch Fashion are targeting different consumer groups, who want to buy unique items at cheaper prices. Of course, they are authentic products, though,” a Lotte ON Official said.
Luxury cosmetics companies such as Estee Lauder, MAC and Bobbi Brown also strengthened their respective online business via partnerships with Coupang, the country's largest e-commerce firm. Starting last month, Coupang directly purchased luxury cosmetics products to sell them to local consumers online.
Other international brands like Kiehl's, La Mer and Santa Maria Novella, which, previously, could only be found at department stores here, have begun online business collaborations with Kurly.
“International luxury brands have seen notable decreases in sales all over the world since late last year, due to the late lifting of travel restrictions that were brought in to slow transmission of the COVID-19 pandemic. They are looking for various ways to boost sales even if it means breaking away from their long-time corporate philosophy to only run an offline business and go online. This tallied with struggling local e-commerce firms that are seeking breakthroughs due to the current stagnant business situation,” a local fashion firm official said.