When Kelly Yoon, a 38-year-old mom from the middle-class enclave of Songdo on the outskirts of Seoul, attended a faculty occasion for her nine-year-old daughter, she was shocked by the designer items dripping from the opposite mothers.
“I saw all kinds of Chanel bags on my way to the classroom,” she mentioned. “Mothers love Bulgari’s Diva’s Dream and Van Cleef & Arpels’ jewelry collections, and a Moncler winter jacket is actually a ‘uniform’ for moms here. The most popular car is a Mercedes-Benz SUV.”
It’s a scene enjoying out throughout the nation, the place a potent mixture of standing seekers, cashed up householders and YOLO-ing (you solely stay as soon as) millennials has mixed to make South Koreans the world’s biggest per-capita spenders on luxury manufacturers.
Koreans’ spending on private luxury items from designer purses to $2,000 puffer jackets, rose 24% to 21.8 trillion received ($16.8 billion) in 2022 — equal to about $325 for each man, lady and baby, in response to a Morgan Stanley report printed earlier this month.
Helping gas the surge was Korea’s runaway housing growth, which noticed property costs in some cities double in the course of the pandemic, making householders really feel wealthier. On the flipside, youthful Koreans despairing they’d by no means get on the property ladder determined as an alternative to spend their revenue on luxury treats.
The development mirrors a world upswing in luxury spending, pushed partially by rising affluence worldwide, that has held propel Bernard Arnault, the French tycoon behind luxury-goods powerhouse LVMH, to turn out to be the world’s richest particular person.
A Prada SpA commercial on the Hyundai Seoul division retailer. Photographer: SeongJoon Cho/Bloomberg
“Everyone seemed so optimistic about their future during the pandemic,” mentioned Lee Wonjae, a sociology professor at Kaist Graduate School of Culture Technology in Daejeon. “Consumer confidence was so strong because stocks, cryptocurrency and housing prices were rising. Even though some people missed the opportunities, their friends were making money, so they believed everything was going to be like this forever.”
Millennials have additionally contributed to the luxury growth, mentioned Ahn Dong-hyun, an economics professor at Seoul National University. “They might have given up on buying a house and try to make themselves happy by buying expensive stuff instead.”
According to a 2022 report from retail big Lotte Group’s member loyalty unit, purchases of luxury items by individuals of their 20s jumped 70% in 2021 in comparison with 2018, the strongest progress amongst all age teams.
Christine Lee, a 30-year-old employee who earns about $24 000 a yr at an insurance coverage firm, mentioned she purchased a 1.6 million received Marni purse in 2020.
Shoppers in Seoul. Photographer: SeongJoon Cho/Bloomberg
“All my friends have at least one luxury handbag,” she mentioned. “Korea’s Gen-Z has a motto: YOLO. We can’t buy a house, it’s too expensive, so why should we save money for the future?”
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Instagram posts bragging about luxury purchasing additionally affected her, Lee mentioned. South Korea ranked No. 3 on this planet by lively social media customers at 91.2% of the inhabitants, in response to a 2022 report from Hootsuite. The rise of Korean popular culture, led by boyband BTS and Oscar-winning film Parasite, has prompted high trend homes and luxury manufacturers to signal Korean stars as ambassadors.
Celebrities comparable to Squid Game actress Hoyeon Jung endorses manufacturers together with Louis Vuitton and Bentley on Instagram, whereas the members of lady band Blackpink endorse luxury firms together with Chanel, Bulgari, Cartier and Tiffany.
Dior this month introduced it has signed BTS member Jimin as a world ambassador, who was mobbed by followers screaming and chanting his title at a Paris trend present final week.
The significance of look can resonate with Korean customers extra, with spending on beauty surgical procedure showing to start out at a youthful age and be far larger than in most different nations, the Morgan Stanley analysts mentioned.
With a inhabitants of simply 51 million, Korea is now as necessary as Japan (inhabitants 125 million) for luxury items makers, with Korean nationals accounting for 10% or extra of complete retail gross sales by top-end manufacturers comparable to Prada SpA, Moncler SpA, Bottega Veneta Inc. and Burberry Group Plc, the report mentioned.
“As for status, a number of studies have shown that financial success tends to be highly valued in Korea, so personal luxury goods can be an important tool to create social stratification,” Morgan Stanley mentioned. In China, luxury spending works out to round $55 per particular person, the report mentioned.
However, some headwinds are coming. Korea’s family debt is larger than Japan, the UK and US, and the Bank of Korea has elevated its key coverage price to three.5% from a low of 0.5% in July 2021, bringing the period of low cost monet to an finish. Real property costs in Korea fell by probably the most on this planet within the third quarter of final yr.
“This kind of a boom won’t last forever, and we might be seeing something similar with what happened in the 1990s in Japan,” after the so-called Bubble Economy burst, mentioned Lee, the professor at Kaist Graduate School of Culture Technology.
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