Chanel returns to Lotte in time for Chinese holiday

Chanel cosmetics agreed to reopen at Lotte Department Store’s main branch in downtown Seoul next week, three years and nine months after it stormed out in fury, grabbing media attention as a catfight between a domestic retail mammoth and a “stuck-up” luxury brand.

Lotte asked Chanel to downsize and relocate its cosmetics booth in 2008, pointing to its relatively low sales. The French brand refused, accusing Lotte of getting back at it for entering rival Shinsegae’s new store in Busan. The brand moved out of seven Lotte Department Store branches in January 2009.

Chanel said it will reopen its booth at its old spot on the first floor on Oct. 3 as it wrapped up negotiations with Lotte.

Neither Lotte nor Chanel, however, wants to talk about what they will do if the same thing ― sluggish sales ― happens again.

“There were no discussions on what we would do based on Lotte’s brand evaluation results in the future,” said Kim Hyun-kyung, Chanel’s public relations manager.

“It is Chanel’s global PR guideline not to comment on anything but the brand and the products. Neither I, nor the headquarters in Paris, can comment on sales or marketing in Korea.”

Lotte’s spokeswoman also said she cannot speak about what has not happened yet.

Like all other department stores, Lotte will continue to rate brands based on sales, service and customer satisfaction twice a year.

“Chanel may post high sales or may not, but sales aren’t the only factor in our brand evaluation. We also don’t always request brands to downsize or relocate. We have a set of criteria for that and all brands are aware of it, but we cannot disclose it publicly,” said Lee Jin-young, PR official at Lotte.

Lee’s team didn’t know of any other brand that has officially complained about Lotte’s assessment policy.

Both sides refrained from commenting on the conditions for Chanel’s reentry, such as the commission it will be paying Lotte or who will pay for the booth’s interior decoration.

Industry insiders said, however, that the commission rate for Chanel has been slightly raised.

A lot of Chinese customers look for Chanel at Lotte Department Store, and thanks to the timely reconciliation, the French brand won’t be missing too many of them during the Chinese National Day holidays through the first week of October.

By Kim So-hyun (sophie@heraldcorp.com)