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Hermes and Chanel decline offers to open stores at Galleria’s Gwanggyo store

The Galleria department store in Gwanggyo

French luxury brands Hermes and Chanel will not open their boutiques at Hanwha Galleria’s new department store in Gwanggyo, Gyeonggi Province, Korea.

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“We have decided not to open our store at Galleria department store in Gwanggyo. It is true that Hanwha Galleria made an offer to us to open our boutique at their newly opened department store, but it was an order from headquarters in Paris that Hermes will not open a store there,” a Hermes official told The Korea Times by telephone on  2nd March.

The official added that their perfume line, which is imported and managed by Shinsegae International, may open its store at Galleria Gwanggyo, but that this too is uncertain.

Chanel said it will launch its cosmetic line at the department store but the boutique will not open there.

Hermes and Chanel are two of the so-called “big three” luxury brands here and abroad, along with Louis Vuitton.

Because the three brands’ power in the local luxury market is so significant, opening stores of all three brands under one roof tacitly helps to give a department store recognition as the top luxury goods store in its region. So far, there are only seven department stores in the country that operate Hermes, Chanel and Louis Vuitton stores and the Galleria branch in southern Seoul’s affluent Apgujeong neighborhood is one of them.

Louis Vuitton has declined to comment on opening its store at the Galleria Gwanggyo.

A Hanwha Galleria official, however, said the department store had undergone positive talks with the three brands who are currently still considering launching stores there.

“At this moment, I cannot confirm anything. It is true that they have not signed a deal yet to open boutiques at our department stores. However, we are talking to them and things are going positively,” a Hanwha Galleria official said.

If Louis Vuitton joins Chanel and Hermes in not opening a store in Gwanggyo, this may put the brakes on Hanwha Galleria’s big plan to make the new branch the biggest luxury goods store in Gyeonggi Province. Last year, the franchise chain revealed that it is targeting 500 billion won ($410.7 million) in revenue in the opening year.

Hanwha Galleria admitted the importance of opening the three luxury brands’ stores in their new department store.

“I agree to a certain point that opening or not opening the stores of Hermes, Chanel and Louis Vuitton affects the success of a luxury department store. Our VIP customers’ spending takes up about 60 to 70 percent of the department’s whole sales. At the Apgujeong branch alone, sales from the luxury brands constitute 40 percent of total sales,” a Hanwha Galleria official said.

A Shinsegae Department Store official also said the three fashion brands’ decision to launch or not launch in a department store has consequences for the store’s marketability.

“It is very important to open at least one of the three brands’ boutiques in the store, and the department franchise put so much effort into it. They have a big role, not just in terms of making revenue, but attracting VIP customers,” a Lotte Department Store official said.

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“Those who want to purchase a luxury item that costs over one million won will feel safer coming to offline stores and taking a good look at it. The sales from luxury goods have helped department stores to survive in the retailer scene due to this reason. This is why opening stores of high-end brands, especially the big three, is imperative for luxury goods stores,” a Lotte Department Store official added.