Swiss luxury watch brand Jaeger-LeCoultre will operate its boutique at The Hyundai Seoul only until the end of March. The main customer base of The Hyundai Seoul is the MZ generation (those born from the 1980s to 2000s), which is interpreted as a result of the tightening wallets of this demographic amid the high inflation era, leading them to close their wallets on ultra-luxury commodities.
Luxury brands, including watches, have secured revenue through price increases, but it is said that growth will inevitably decline in the coming years due to the economic downturn.
According to industry sources on the 5th, Jaeger-LeCoultre will operate its boutique at The Hyundai Seoul only until March 31. However, inquiries regarding after-service can be addressed at other boutiques. Jaeger-LeCoultre operates six other boutiques in the Seoul area besides The Hyundai. A representative from Hyundai Department Store noted, "Discussions about closing are ongoing under mutual agreement between the two parties," adding, "We carry out merchandise department reforms every year, and discussions are taking place in this context."
More than 50% of the customer base at The Hyundai Seoul is said to be the MZ generation. The brands available are primarily those favored and purchased by the 2030 demographic. It was only in 2023, two years after opening, that Louis Vuitton began to enter, and ultra-luxury brands like Hermès and Chanel are rarely seen. Instead, mid-range luxury brands such as Gucci, Balenciaga, and Tod's are present. Among luxury watches, Rolex is considered a "gateway" brand, but Rolex is also not available at The Hyundai Seoul. Industry views suggest that the target customers of The Hyundai Seoul and the demand for Jaeger-LeCoultre do not perfectly align.
Moreover, with the economic downturn, there are claims that the demand for high-end watches is not what it used to be. Earlier, in August of last year, Drawer Circle, a dealer handling several luxury watch brands including Jaeger-LeCoultre, withdrew from the main branch of Shinsegae Department Store.
Jaeger-LeCoultre is one of the brands owned by Richemont Group. Richemont is considered one of the giant luxury groups alongside LVMH and Kering. While LVMH and Kering focus on leather and fashion brands, Richemont owns several top-tier jewelry and watch brands, including Cartier, Van Cleef & Arpels for jewelry and Vacheron Constantin, A. Lange & Söhne, and IWC for watches.
When looking only at sales, luxury brands including Richemont appear to continue growing. On the 16th of last month, Richemont announced its fourth-quarter revenue increased by 10% year-on-year to 6.2 billion euros (about 9.35 trillion won). However, this is largely due to successive price increases that have compensated for the decrease in demand. Global consulting firm McKinsey noted in the Financial Times that "over 80% of the revenue growth of luxury companies from 2019 to 2023 was due to price increases," labeling it "one of the issues self-created by the industry."
Particularly, the Chinese market has not escaped from recession since the COVID-19 pandemic. Indeed, Richemont's fourth-quarter sales also saw a 7% decline in the Asia-Pacific region. In the combined regions of mainland China, Hong Kong, and Macau, there was an 18% drop.
Global consulting firm Bain & Company recently analyzed in its luxury market report that "luxury sales in China, the major player in the global luxury market, decreased by 20% last year. Sales of high-end watches and jewelry fell by more than 30% year-on-year," adding that "the Korean luxury market is also under the influence of domestic recession."
According to the WatchCharts Overall Market Index, which tracks prices of 60 watch brands including Jaeger-LeCoultre, Rolex, Patek Philippe, and Audemars Piguet, total sales in the watch market decreased by 5.1% over the past year.