Rolex resale prices tumble as the wealthy young tighten belts

The most sought-after luxury items such as Rolex watches and Chanel bags are selling at a much lower premium, or even below their original prices in South Korea’s secondhand market, hit by their shrinking buyer pool and increased supply.

From this month, Rolex allows customers to buy two of its watchers per year “to reduce the inventories of unpopular products,” according to luxury market sources on Thursday.

Previously, it had put a cap on each buyer: one item per person every year.

In the secondhand market, a Rolex Submariner Date watch, nicknamed “Starbucks,” is traded in the 20 million won ($16,000) range, almost half its price in the 38 million won range in June of last year.

Chanel’s signature “Medium Classic Double Flap Bag” is selling for 11 million won in the resale market, down from 14 million won in December of last year.

Once the Chanel bag had traded at a premium of about 300,000 won ($230) in the secondary market thanks to its scarcity value and high liquidity, which made it a lucrative investment asset.

Reflecting the strong demand, the French luxury brand hiked its handbag prices four times in 2021 after its sharp price increase the previous year.

But the secondhand market for luxury goods is now inundated with Chanel bags, said the industry officials. Many of these secondhand items are traded below their retail prices. 

Behind the subdued luxury resale market is the reduced spending by those in their 30s and 40s, the main buyers of high-end items.

The cooling job market and slower wage growth led to their spending cuts amid growing fears of a recession.

Naver Corp., South Korea’s top online platform, increased its paychecks by 4.1% on average last year, compared to the 26% hike in 2021, according to its annual report.

In January, popular foreign luxury brands saw their sales decrease 7.2% from the previous year, according to the Ministry of Trade, Industry and Energy.

It marked their first on-year decline in sales since March 2020 when the COVID-19 pandemic struck.

Their shops within the country’s three major department stores also suffered a 5.8% decline on-year in sales on average in both January and February of this year.

It reversed their sales growth of 20% or above on average in the past three years.

Loosened travel restrictions have cooled the luxury fever as well.

After the border reopening, South Korea’s well-to-do are opening their wallets toward overseas travels while curtailing luxury shopping.

Sales of travel bags have more than trebled in domestic department stores up to date, compared to last year.

In January, the Wall Street Journal coined the term “richcession,” meaning the wealthy will take a bigger hit from a recession, if it occurs this year, than usual.

“In the absence of confidence about an economic rebound, the rich are not willing to increase spending,” said professor Seo Yong-goo at Sookmyung Women’s University.

Write to Jeong-Cheol Bae and Yurim Oh at bjc@hankyung.com
Yeonhee Kim edited this article.