Editor’s Note
In a sluggish luxury market, major brands are raising prices for jewelry and watches—a counterintuitive move analysts call a “price paradox” aimed at leveraging scarcity to fuel demand.
Major luxury brands are successively raising prices for jewelry and watches. This is happening even as the overall performance of the luxury industry remains sluggish due to the impact of a consumption downturn, while demand for jewelry and watches continues to soar. Analysts suggest this is a strategy to highlight scarcity and stimulate purchase desire by increasing prices.
According to the luxury industry on the 14th, the French luxury jewelry and watch brand Cartier raised the prices of jewelry products sold in South Korea by about 2-5% starting from the 10th. The popular ‘Juste un Clou Bracelet Small’ increased from 5.85 million won to 6 million won, a rise of about 2.5%, while the ‘Trinity Ring Classic’ went from 3.29 million won to 3.42 million won, a 3.9% increase. This is Cartier’s third price hike this year, following increases in February and May.
It’s not just Cartier. The watch brand Jaeger-LeCoultre, part of the Richemont Group, will raise prices starting the 15th. The Japanese luxury jewelry brand Tasaki, popular for wedding bands, also increased prices by about 5-10% this month. The French brand Boucheron raised prices of products sold in South Korea by about 6% in July.
The successive price increases by jewelry and watch brands contrast with the ongoing ‘luxury downturn,’ where even global luxury groups like LVMH and Kering are seeing their sales growth rates slump to single digits. In fact, LVMH’s sales for the first half of this year decreased by 4% compared to the same period last year, with operating profit down 15%. During the same period, the Kering Group saw sales drop 16% and profits plunge 46%, mainly due to the poor performance of its core brand Gucci.
The surface-level reasons given by the jewelry and watch industry for the price increases are rising raw material costs and tariff burdens. Gold prices are breaking record highs daily. According to the alternative data platform Hankyung Aicel, the price of gold on the Chicago Mercantile Exchange (CME) surged to $3,636.9 per troy ounce on the 12th, a sharp increase of 44.7% compared to the same period last year. It has also soared 36.7% since the beginning of the year ($2,658.9). Additionally, the U.S. government’s announcement to impose additional tariffs of up to 25% on high-end watch and jewelry products from some countries, including Switzerland, is also a burden factor. The industry explains that craftsmanship fees and labor costs have also steadily risen, increasing manufacturing costs.
However, behind the price increases lies a ‘scarcity strategy.’ The judgment is that raising prices increases scarcity and maintains the brand’s premium image. For luxury jewelry and watches, the price itself symbolizes the brand’s status. Price hikes have the paradoxical effect of stimulating consumers’ purchase desire.
Before luxury companies raised jewelry prices, demand surged, leading to recent ‘open run’ phenomena. In September, before Cartier’s surprise price increase, long lines formed early in the morning outside major department store boutiques. As the price increase was anticipated, consumers rushed to buy, judging that ‘now is the cheapest.’ Brands can also achieve the effect of boosting sales in the short term.
Jewelry and watch sales at domestic department stores are soaring. Sales at the three major department store companies all increased by over 30% from January to August this year compared to the same period last year.
