Chanel, Louis Vuitton accused of abusing power
Local department stores pay for luxury brands' interior when opening boutique inside
/NOVOSTIVL/ French luxury brands Chanel and Louis Vuitton stand accused of abusing their brand power against local department stores.
According to an industry source, both Chanel and Louis Vuitton have been forcing department store franchises here to bear the cost of "decorating" their boutiques when they open them inside the stores.
"In most cases, Chanel and Louis Vuitton don't pay for the interiors of their boutiques. If they are generous, the expense may come down to 80:20. You rarely see department stores and luxury brands pay 50:50," the source said
"If you say this is a rule of capitalism, nothing can be said about it. Chanel and Louis Vuitton have an advantage over department stores here. Whether or not the two brands open boutiques in the store directly affects sales. So they have to do whatever to please the two luxury brands."
Chanel Korea said through its PR agency Synergy Hill & Knowlton that it would check the facts, but then made no further comment.
Five years ago, when Hyundai Department Store opened a branch in Seongnam, Gyeonggi Province, Louis Vuitton opened an outlet there allegedly under the condition that Hyundai would not charge it rent for two years.
Louis Vuitton Korea declined to comment.
Hyundai Department Store also said it could not comment on the issue as it is related to specific details of its contract with Louis Vuitton.
There also appears to be "a battle of pride" raging between Chanel and Louis Vuitton here too.
It seems Chanel won't open a boutique in a department store if Louis Vuitton has not opened one there first.
"This is a really funny situation. There are department stores with both Chanel and Louis Vuitton boutiques, and those with the latter brand alone. But when you try to find a department store with only a Chanel store, there are none," the source said.
"Louis Vuitton makes much more money here, but Chanel just believes it is better than Louis Vuitton, no matter what."
It is unclear if it is Chanel and Louis Vuitton's policy, but they rarely open a boutique at a department store that has just opened.
The two luxury brands wait to see which other brands open boutiques first to check if business there is lucrative or not.
"There is an unseen hierarchy between luxury brands here and I am pretty sure it applies on the global scene too. Hermes is No. 1, followed by Chanel and then Louis Vuitton," the source said.