In the face of a downturn in sales for major online luxury retail platforms in South Korea, recent industry data indicates a contrasting resilience within the pre-owned luxury market. Despite economic challenges, the pre-owned luxury sector marked a record transaction volume last month, coinciding with the start of the new school year.
Financial reports submitted to the Financial Supervisory Service reveal that the three prominent online luxury platforms—Must It, Trenbe, and Balaan, collectively known as “Mutbal”—have experienced operating losses in 2022.
Trenbe’s revenue plummeted by 54.5 percent to US$28.6 million, while Balaan experienced a 56 percent decrease to $28 million. Operating losses for these platforms amounted to $2.2 million and $7 million, respectively.
Must It saw a sales decline of 24.5 percent to 24.98 billion won, resulting in an operating loss of $5.5 million.
A shift in consumer behavior has been attributed to these declines. Initially spurred by the pandemic-induced preference for contactless shopping, online luxury platforms faced a shift as the pandemic evolved into an endemic phase. Additionally, increased spending during overseas travels and high inflation contributed to the decrease in online luxury sales.
Intense competition and excessive marketing expenses further strained the financial stability of these platforms, prompting cost-cutting measures such as reduced marketing budgets and personnel costs.
CatchFashion, once a significant player in the luxury platform sector, ceased operations in March due to financial difficulties.
Conversely, the pre-owned luxury goods market demonstrated resilience amid the economic challenges. Gugus, operating 26 offline stores near department stores, reported a 20 percent year-over-year increase in gross merchandise value to $153.8 million in 2023.
The resale market’s vitality is reflected in the diverse transactions, with handbags accounting for 48 percent, watches for 19 percent, jewelry for 13 percent, clothing for 11 percent, and shoes for 4 percent.
The appeal of the resale market lies in consumers’ desire for both cash and discounted premium goods during economic uncertainty. Scarce items like the 2023 Hermès Kelly 28 bag command significantly higher prices on the resale market compared to their original retail prices.
According to industry insiders, despite the economic challenges, the pre-owned luxury market continues to grow steadily, driven by increased demand for more affordable luxury items from brands like Hermes, Louis Vuitton, and Chanel.
This article was originally written by Ashley Song and published via Korea Bizwire.
Your go-to for supply chain report news updates: The Supply Chain Report. For international trade tools, see ADAMftd.com.
#LuxuryResale #ResaleMarket #ThrivingLuxury #EconomicShift #FashionEconomy #LuxuryTrends #ResaleRevival
