The invincible Chanel, Hermès: How Korea remains rare growth market for top luxury brands

[NEWS ANALYSIS]  

It was only 10:10 a.m. on a Wednesday — before department stores open — but Lotte Avenuel, Lotte Department Store's standalone luxury annex in central Seoul, was swarming with shoppers lining up for the opening rush. Two of them, both women, had come together for Cartier jewelry after seeing that prices had jumped again earlier this year.

Kim Sol-mi, a woman on parental leave, said she had tracked the upcoming price hike on an online community and decided to buy a necklace before the next increase.  

"The price has gone up so much in just three months. It's getting out of hand," she said, half-laughing. She had tried to buy the same piece the previous week and walked away empty-handed. "I'm hoping today works out."

Choi, a woman who was using a vacation day, was after a Cartier bracelet for the same reason. She had researched the price trajectory through blogs and online forums. “If the boutique was out of stock, I would have to go home and buy it online,” she said. “It would be sad because it's always better to see if it goes along well after trying it on.”

Enthusiastic Korean shoppers like Choi and Kim have propelled Korea into one of the few growth markets for high-end luxury brands such as Chanel, Louis Vuitton and Hermès at a time when the industry faces stagnant sales even in once booming markets like China.

Global luxury is in retreat. Korea defies.

LVMH's worldwide revenue fell 5 percent in 2025. Chanel's most recent annual results showed sales down 4.3 percent globally and operating profit down 30 percent. The two largest luxury markets, China and the United States, both faced sustained pressure, with LVMH's Asia revenue falling and the U.S. market moving from sharp decline to stagnation through 2025.  

Hermès was the only one of the three to grow, but its global pace lagged well behind the rate at which it grew in Korea . The country was singled out by name in Hermès' first-quarter 2026 earnings call. "Korea maintained solid momentum while performance in the rest of the region was more subdued," Eric du Halgouët, the company's chief financial officer, told analysts in April.

In the same year, the Korean units of all three brands posted their highest revenues on record. Hermès Korea broke 1 trillion won ($670 million) for the first time in 2025, with operating profit up 14.5 percent over a year ago. Chanel Korea cleared 2 trillion won, with operating profit up 25 percent. Louis Vuitton Korea hit a fresh peak of 1.85 trillion won, with operating profit up 35.1 percent. Combined revenue across the three reached nearly 4.99 trillion won and combined operating profit topped 1.17 trillion won.

The contrast is stark. LVMH's Fashion and Leather Goods division, which houses Louis Vuitton, shrank 8 percent globally while its Korean subsidiary set a revenue record. Chanel's worldwide business is contracting on both revenue and profit, while Chanel Korea is setting record highs on both. Even Hermès, the one luxury house still growing globally, grew nearly twice as fast in Korea as it did worldwide.

One of the main drivers here is the rise in the incomes of upper-income earners, as reflected in gains in Kospi and other stock prices. According to KB Financial Group’s “2025 Korea Wealth Report,” the total assets held by wealthy Koreans with more than 1 billion won in financial assets reached 3.066 quadrillion, up 8.5 percent from a year earlier. That amount accounted for 60.8 percent of all household financial assets in Korea.  

"When the Kospi rises, and people make money, they feel more inclined to spend. That can make them more willing to purchase luxury items from brands such as Hermès, Louis Vuitton and Chanel," said Prof. Lee Hong-joo of the Department of Consumer Economics at Sookmyung Women's University. "In economics, this is known as the wealth effect. When people feel that their wealth has increased or that the value of their assets has risen, consumer sentiment improves."

The split with the rest of luxury

Still, the spending spree remains heavily concentrated on a trio of luxury houses — Chanel, Hermès and Louis Vuitton — while brands perceived as less exclusive struggle to keep pace.

Christian Dior Couture Korea posted a second consecutive year of revenue decline in 2025, with sales down 18.1 percent after falling 9.6 percent in 2024. Operating profit dropped 43 percent.

The brand has been losing traction with the younger consumers who fueled its post-Covid-19 pandemic surge in Korea, and the Italian factory labor scandal that broke in 2024 has continued to weigh on its image.

Gucci Korea’s parent company Kering reported Gucci's global revenue down 25 percent in the second quarter of 2025. Gucci Korea overhauled its leadership in October 2025, reducing its representative directors from three to two, with CEO Alberto Valente resigning and being replaced by a co-CEO structure under Ha Tae-kyung and Emmanuel Delrieu.

For brands outside the top tier, the pressure is even more sustained. Salvatore Ferragamo Korea's revenue peaked at 150.3 billion won in 2019 before falling to 98.4 billion won by 2023, and the brand has struggled to recover the relevance it held among Korean consumers a decade ago.

The bifurcation matters because it shows the Korean strength is not a broad luxury appetite but a concentrated bet on the very top of the pyramid. Korean consumers have not stopped reading global luxury price signals. They have decided, specifically, that the top three are worth paying for.

Higher prices, hotter demand

The numbers tell the story of where the demand is concentrated. Hard luxury, the industry term for high jewelry and watches, is outpacing fashion-led luxury by a meaningful margin in Korea. 

The pattern of price hikes preceding sales gains is particularly pronounced in Korea as consumers flock to brands before prices surge.  Hermès raised prices on bags and shoes in January and June 2025, pushing the Birkin 30 in Togo leather from 18.31 million won to 20.11 million won.  

Chanel raised prices for fashion in 2024 and 2025. Cartier raised jewelry prices in February and is widely reported to be planning another increase before the end of the second quarter. Sales accelerated with every increase.

Industry analysts call this a Veblen effect, where higher prices increase rather than dampen demand.  

Lee Eun-hee, a consumer studies professor at Inha University, said two reinforcing dynamics are driving the pattern in Korea. The first is what she called a "differentiation effect," in which price hikes sharpen the line between the genuinely wealthy and the merely well off.  

"From the perspective of affluent consumers, price increases are not necessarily a bad thing because they reinforce this differentiation effect," said Prof. Lee Eun-hee. "People buy more to avoid being excluded from the group of genuinely wealthy consumers."

The second is the asset character of the goods themselves. "Luxury goods often retain their value through resale. Rare or highly sought-after lines and models can appreciate in value," Prof. Lee Eun-hee said. "As a result, demand for luxury goods is not driven solely by the desire to use them. Many people view them as an investment."

Repeated price hikes reinforce the perception that today's price is the cheapest a Chanel or Cartier piece will ever be, and that conviction holds even when the same product is being marked down in Beijing or struggling to sell at full price in New York. The disconnect between Korean expectations and global pricing pressure is the structural feature that defines this market.

Why Korea is the outlier

The simplest explanation for the divergence is that Korean luxury demand is structurally different from luxury demand elsewhere.

Department store concentration plays a role. Korean department stores have given the top luxury brands category-by-category boutiques such as handbags, menswear, watches and beauty at a level of dedicated retail presence that does not exist in many Western markets. 

A Chanel customer in Korea encounters the brand across multiple floors of a single department store, in a way she would not in Paris, Milan or New York. The consistently successful sales of the big three have coincided with those of Korean department store luxury sections as well. 

Lotte Department Store's luxury sales rose 30 percent on year in the first quarter of 2026.  Within the luxury category, jewelry and watches led the surge at 55 percent, followed by clothing at 25 percent and premium imported furniture at 20 percent.

Shinsegae Department Store reported even stronger growth between Jan. 1 and Saturday. Total luxury sales rose 33.8 percent, with luxury jewelry up 68.6 percent and luxury watches up 30.7 percent. 

At Hyundai Department Store, luxury goods sales rose 30 percent on year in the first quarter of 2026, while watch and jewelry sales increased 50.2 percent from a year earlier.

How long can it last

Korea has become a rare market where global luxury defies its own cycle. The question is whether the dynamic that made the country an outlier in 2025 will hold through the rest of 2026.

So far, the answer is yes. Lotte and Shinsegae's first-quarter luxury growth rates are accelerating rather than slowing, and the buyers queuing at Lotte Avenuel on a Wednesday morning are tracking the next price hike rather than waiting for one to slow them down.  

The luxury industry, meanwhile, has every incentive to keep the divergence going. With China still recovering and the United States slowing, Korea is no longer a side market. It is the rare growth engine in a slowing global cycle.  

From a country of 51 million people, three French luxury houses are pulling close to 5 trillion won a year. Paris and Milan have every reason to keep raising prices and watching Seoul absorb them.

BY KIM MIN-YOUNG [[email protected]]