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The Deep Dive

Behind Korea’s bizarre 'open run' race for Chanel bags

Yes, some people in Korea wait all night and sprint through department stores in the hopes of grabbing that latest Chanel bag

By Jun 08, 2021 (Gmt+09:00)

A long line of customers wait outside the Louis Vuitton store of Lotte Department Store's main branch
A long line of customers wait outside the Louis Vuitton store of Lotte Department Store's main branch

In South Korea today, running has become an increasing part of everyday life, particularly at a place where you would least expect to see a large group of sprinters: the department store.

Last Friday, around 5 a.m. in front of the Shinsegae Department Store’s main branch in Myeong-dong, people carrying folding camping chairs began to arrive one after another. They were all here to line up for the same event, the so-called “open run," the freestyle sprint to buy luxury goods as soon as the stores open in the morning.  

Kim Joong-do is a 56-year-old night-shift worker who is also an open-run professional. After his late-night shift, which ends at 4 a.m., he tours around six department stores across Seoul every day.

“I only go to Chanel. If I succeed in buying a Chanel bag, even a small one, I still make 300,000 won ($270) by reselling it online,” said Kim.

Consumers going for an 'open run' (Courtesy of Yonhap News)
Consumers going for an 'open run' (Courtesy of Yonhap News)

The scene in front of the Lotte Department Store’s main branch, located just down the road from its competitor’s head branch, was not too different. An office worker in her 30s said she has been waiting since before sunrise for the “open run” to the Chanel store at Lotte.

Another woman in her 60s said that it was her fourth try lining up so early in the morning to get the Rolex watches she wants to give to her son and future daughter-in-law as their wedding gift.

Such an unprecedented craze for high-end luxury items has skyrocketed luxury brand sales at the country’s top-three department stores.

According to Hyundai, Lotte and Shinsegae department stores, the revenue from selling luxury goods in April and May increased by 49-56% compared to the same period last year. The growth figure of last April and May versus the same period of 2019 was only 16-28%.

Now it is common to see long lines in front of department stores' luxury brand boutiques, such as Chanel, Hermes and Rolex. The lines, which have been forming since the summer of last year every day the department store is open, are still forming now in June 2021.

Given the phenomenon, line standing is now considered a lucrative side hustle in Korea. Part-time line standers receive 100,000 ($90) won per session and up to 300,000 won ($270) including the finder's fee if they manage to buy the item the client wants.

“This game is not about what you buy. Rather, it’s all about what you ‘can’ buy. Most of the time the item is already out of stock. It depends all on your luck on the day,” said a part-time line stander waiting in front of the Shinsegae Department Store.

He added that he succeeded in getting the first-number queue ticket for the Chanel store that morning, after having waited in front of the store from 8 p.m. the previous day.   

“The number on my queue ticket is only 27,” said another part-time line stander who arrived around 6 a.m. Around 50 people had gathered in front of the department store by 7 a.m. The queue ticket number went up to 105 for those who arrived at 10 a.m.

Those waiting at the very front of the 200-meter open-run line happened to be resellers. They are the ones who buy Chanel bags at retail prices and resell them when the market price goes up due to the scarcity of certain models.  

“The bags have a high resale value. Chanel’s Classic Caviar Medium bags are now traded at a price 1 million to 2 million won ($900-1,800) higher than the retail price,” said a reseller waiting in line.

Chanel Classic Caviar Medium Flap Bag
Chanel Classic Caviar Medium Flap Bag

Around 11 a.m., the re-seller and his co-workers hopped on the bus to Apgujeong, where a Hyundai Department Store is located, following hearsay that the Apgujeong branch will have some Classic Medium bags on for sale that day.

“I actually set up my own reselling enterprise recently,” he added.

The customers in South Korea can purchase only one bag of Chanel’s Classic line every year. The resellers say that such a policy helps maintain the high resale value of bags in the brand’s Classic line.

They also note that high liquidity is another factor making the luxury brand products attractive. The resellers share the conviction that the luxury items can be turned into cash almost any time they want.  

Those standing behind the resellers in the 200-meter line were those who were buying for their own purposes.

“My husband said he is going to buy me a bag for our fourth wedding anniversary. If I can’t find the bag I want, I am going to buy whatever bag they have anyway!” said Lee, a woman in her 30s.

REACTIONS BY THE LUXURY & DEPARTMENT STORE INDUSTRIES

South Korea has now become the seventh-largest market for luxury brand items, amounting to around 13.9 trillion won ($12.5 billion) last year, surpassing Germany, according to a report by Euromonitor International.

“This is unprecedented. I’ve never seen this fever for luxury brands before in Korea,” said a luxury brand industry official with more than 20 years' experience in the field.

The Korean luxury market grew during the pandemic whereas major Western countries and Japan saw a 20% decline, on average, in the market.

“The Koreans are buying almost every item we have, from steady sellers to the latest trendy ones,” said an industry official who recently launched a new watch brand in the country.

The unprecedented interest in luxury items is giving a nod to more frequent and more drastic price hikes. The luxury brands had previously raised their retail prices only annually or biennially at a rate of 5-6% each time. But now they are raising the prices about four times a year at a 10% rate. Some customers have started hoarding the items before the price increase.

“Unlike other items, the luxury goods have few substitutes. That’s one of the reasons why the customers keep buying our products even after the price tags have been changed,” said a luxury brand representative.  

The department store operators are reacting swiftly, too, by analyzing customer data and devising relevant sales growth strategies.

“Prior to the pandemic, the main group of customers were in their 30s and 40s. Now the fever is led by those who are younger, in their 20s and 30s. We expect the market to grow even larger, considering the deep-rooted Korean culture of being conscious about how others think and what others have,” said a luxury goods merchandiser working at a major department store.

THE PSYCHOLOGY BEHIND THE PHENOMENON

In the US, just after the Sep. 11 attacks in 2011, expenditure on jewelry, watches and luxury cars rebounded faster than any other industry. A group of researchers at the University of Pennsylvania analyzed that a strong sense of self-love is manifest following the events of a crisis, such as a terrorist attack or a pandemic, driving people to spend more on luxury goods. 

The experts in Korea also note that there are psychological, social as well as demographic factors that must be examined in detail to understand the phenomenon of luxury hoarding.

South Korea is globally known for having a highly competitive society. Korean people, in general, like to show off in many aspects of life, including what they possess. Industry officials note that such is the reason why the luxury goods market has been growing at a steady rate for the past few decades.

(Graphics by Jerry Lee; illustrated by Ra-mi Huh)
(Graphics by Jerry Lee; illustrated by Ra-mi Huh)

Experts note that the difference now is that we have a whole new generation of consumers entering the scene, the Millennials and the Generation Z, shortened in Korea as the “MZ Generation.”

These MZ consumers, the experts say, represent a new generation who have completely lost hope in buying their own house or apartment. Prior generations, granted that they worked hard and saved a lot, could buy their own house or apartment after working for a decade or two.

But now, with the country’s housing prices described as “nothing but crazy” by the media, politicians and average citizens alike, the experts highlight that the hopes lost in the real estate segment are ironically funneling the MZ consumers’ basic human desire for security and social status into the luxury goods market.

“Luxury goods reflect South Koreans’ emphasis on being able to achieve social equality. The MZ generation wants to be on equal grounds with the rest of the society by purchasing what the others have,” said a fashion industry representative.

The industry figures also depict the fast rise of the MZ generation as a major spending group. According to Hyundai Department Store, 45.2% of those who bought luxury items in April and May this year were MZ customers. The figure was only 25.6% during the same period two years ago, in 2019.

South Korea’s YouTube community, considered as a yardstick for the country’s latest cultural trends, is also full of clips by teenagers and those in their early 20s unwrapping and evaluating their luxury brand purchases on camera.

The term “flex” or “flexing”, originally coined in the US in the 1990s among hip-hop musicians flaunting their fast-gained wealth, is now a commonly used word among the youth in Korea as well.

Pop culture experts say that the idea of “flexing,” combined with the global trends of YOLO (you only live once) and FOMO (fear of missing out), provide a comprehensive answer to why South Korean young people are becoming obsessed with luxury items.

“It’s difficult to get any attention or recognition among my friends if I don’t have a luxury item,” said a teenage customer.

Others note that the country’s different groups of consumers are all virtually being forced to spend money within the country due to the ongoing international travel lockdown.

“As people can’t travel overseas, including on their honeymoons, they are spending more on luxury items here in Korea,” said a major department store representative.  

A psychology expert stated that the luxury item phenomenon can be also be seen as an example of South Korea’s culture of collectivism.

“The South Koreans, living in more of a collectivistic society than an individualistic one, feel more comfortable when they have a sense of belonging. Such culture quickly drives fashion and food trends to spread nationwide. The idea is basically the same for luxury goods,” said Professor Gwak Geum-ju of Seoul National University Department of Psychology.

The professor added that South Korea is also a highly materialistic country.

“Here, people tend to judge others by how they look and what they have. In France, the middle class is defined based on your ability to play a musical instrument, speak a foreign language or cook different cuisines. But here, we define our middle class simply by real estate ownership and the amount of cash in our savings accounts,” added Gwak.  

“The craze over the luxury items can be described as the self-portrait of the country that values people's looks and their materials over anything else.”


K-POP STARS FUELING THE FEVER 

Industry experts note that teenagers and those in their 20s are further exposed to the charm of luxury brands due to their close association with the top K-pop celebrities.

According to the industry on June 7, a total of eight global luxury brands have appointed K-pop stars as their brand ambassadors.

BTS' Jimin in a Louis Vuitton pullover sweatshirt
BTS' Jimin in a Louis Vuitton pullover sweatshirt

The global sensation BTS was appointed as Louis Vuitton’s official ambassador in April, whereas Chanel’s official ambassadors include Jennie of Blackpink as well as G-DRAGON.

Jennie’s fans call her a “Human Chanel” because of her open fondness for Chanel’s items. She has been a Chanel ambassador since 2019.

Blackpink's Jennie in a Chanel top
Blackpink's Jennie in a Chanel top

Gucci’s ambassador is IU, a female artist who enjoys popularity across all generations in Korea.

Singer-songwriter IU is a Gucci brand ambassador
Singer-songwriter IU is a Gucci brand ambassador

In the Korean YouTube scene, videos like one of a middle school student unwrapping a box containing a Chanel Mini Bag, which retails for more than 2 million won ($1,800), are still garnering a large number of views.

“Parents in the past came here to buy high-priced windbreakers or padded jackets. Now, they are here for a pair of Gucci sneakers. That’s the difference,” said an official of a major department store.

Write to Sul-li Jun, Jeong-cheol Bae and Ji-hye Min at sljun@hankyung.com

Daniel Cho edited this article.

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