South Korea Luxury Goods Market Report and Forecast 2024-2032

South Korea Luxury Goods Market Outlook

The South Korea market for luxury goods reached a value of more than USD 6.69 billion in 2023. The South Korea luxury goods market is expected to reach the value of approximately USD 10.02 billion by 2032 and grow at a CAGR of 4.6% between 2024 and 2032.

News and Developments in the Market

Due to the expansion of retail outlets such as department stores, boutiques, and shops using internet platforms and second-hand sales, the market for verifying genuine luxury items  has expanded more recently. The authentication market is also being fueled by the reselling trend, in which customers buy high-end goods and then resell them for a profit. 

Over the past two years, the market for luxury products has expanded quickly as "revenge purchasing" increased because of the COVID-19 outbreak. Market dynamics have changed, particularly as a result of e-commerce platforms like Mustit, Balaan, and Trenbe. Over 4,000 requests to authenticate products have been made in the three months since Koibito, a business that deals with used luxury goods established its authentication service in June 2023.

One trillion won ($833.4 million) in annual gross sales  were made by 11 department shops in South Korea, led by locations in affluent areas of southern Seoul, as young and wealthy people splurged on luxury as a result of still-restricted overseas travel. Last year, 45.5 per cent of Lotte Department's total luxury sales came from customers in their 20s and 30s, as did 50.5 per cent and 48.7 per cent for Shinsegae Department Store and Hyundai Department Store, respectively. This year, it's anticipated that the nation's offline retail stores will continue to satisfy affluent shoppers in their 20s and 30s. Lotte Department Store's international fashion sales, which include sales of foreign luxury brands, increased by 25.5% as a result of the younger generation's appreciation of high-end luxury goods. Hyundai Department Store saw a 44.9 percent increase in premium brand transactions, while Shinsegae Department Store saw a 38% increase. 

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Key Trends in the South Korea Luxury Market

A luxury good may not be necessary for existence, yet it is highly regarded in a culture or society. The demand for luxury goods increases along with an increase in a person's wealth or income. Generally, there is an inverse relationship between income growth and the percentage increase in luxury goods purchases. Luxury purchases often correspond to a person's income or fortune; as wealth rises, so do luxury purchases.

Digitalization and a sustainable approach to luxury

Manufacturers now put emphasis on creating environmentally friendly luxury goods to improve the environment, meet growing demand for sustainable luxury products and fulfil social responsibility to give back to mother nature and preserve it. In particular, the luxury fashion industry is experiencing a drastic transition as it is shifting to fashion-tech. Several brands in South Korea are now incorporating eco-friendly approaches to meet the rising demand for sustainable luxurious products and improve the shopping experience.

Digital platforms are steadily growing as brands now reach out to more people and provide unique and new solutions. It also ensures quick customer service and aids in the development of new luxury products, thereby propelling the luxury market of South Korea.

Sustainable Innovative Approach in the Fashion Industry to Promote the Luxury Market Growth in South Korea

Any natural or artificial product that is associated with biological systems is referred to as a biomaterial. Technology is used to investigate the fundamentals of natural systems and incorporate the qualities to develop new materials that have a low impact on nature while producing high-quality products and designs. Luxury brands are researching using biomaterials not just for clothing or shoes but also for cosmetics and beauty goods. By minimising the negative effects of procuring raw materials (via excess farming, mining or extracting, and fishing), the application of biotechnology could very well support sustainable production techniques. Several big companies in these domains collaborate mostly with biotech-focused startups. Kaesa, a South Korean luxury handbag brand, manufactures vegan leather bags with cactus-based leather that is free from harmful chemical products. These products are cruelty-free and also help in reducing the carbon footprint, thereby protecting both flora and fauna.

Opportunities in the South Korea Luxury Market

The Emergence of vintage luxury products and the growth of conscious and ethical fashion in the South Korea Luxury Industry

The recycling, thrifting, and upcycling of goods is a trend that is soaring high in the market and is urging customers to become socially responsible and follow as well as promote ethical fashion. Consumers are again inclined toward vintage products, which supports sustainability as these are used products and help in reducing carbon emissions, thereby aiding in preserving the environment. The sale of vintage luxury items such as bags and watches are widely accepted by the public. Many high-end fashion brands re-launch vintage products to recuperate customer interest and, hence, drive the South Korean luxury market.

Gen-Z and the Millennial Generation are Significant Consumers of Luxurious Items

The South Korea luxury market is majorly driven by the high-income group of society. The country is one of the advanced economies and is known for its advanced technology and sustainability. The standard of living and disposable income in South Korea are quite high, which aids the market's growth. Additionally, brands usually target wealthy millennials and Gen Z as they actively follow globalised trends to maintain their status. Hence, they play a key role in driving the luxury market.

Social Media Booming the Luxury Products Market in South Korea

People are active on social media sites (SNS) owing to the high reach of the internet and smartphone ownership among the South Korean population. Social media influencers popularise the trend and motivate people to follow them. Brands use social media platforms to promote their products via advertisements, giveaways, online events and contests, and paid promotions with social media influencers. Social media has played a pivotal role in popularising the latest fashion trends among customers, thus augmenting the luxury market in the country.

Skin Care, Perfumes, and Cosmetics Products Gain the Significant Traction in the Market

Skin care luxury products perform well in South Korea. The standards for beauty are high, and people pay close attention to hygiene and outer beauty, which drives the market growth. Despite the coronavirus pandemic, U.S.-based premium skin care brand Estee Lauder acquired & Be Co. Ltd. The company also shifted its operations online and developed its online distribution channel upon the closure of stores in 2020. In South Korea, the younger generation, particularly millennials and Gen Z, are major consumers of high-end fashion, which is one of the most significant factors behind the soaring luxury industry in South Korea.

Challenges in the South Korea Luxury Market

The market slowdown during COVID-19 

The luxury market in South Korea as well as the rest of the world experienced a drastic decline in sales. Many stores closed and supply chains got disturbed. Moreover, restrictions on tourism and a sudden transition from spending on luxury goods to necessities, among others, affected the south Korea luxury market adversely. However, with the surge of e-commerce and new promotional strategies, the market seems to have revived well and is expected to grow further during the forecast period.

The growing Trend of Renting luxurious products

Many people who cannot afford the limited editions of luxurious brands often buy second-hand products. There is a famous trend of renting, in which people take the luxurious good for some time as it costs them less than buying the original item. This restrains the growth of the market in the country. Many rookie K-pop idols who come from small agencies could not afford luxurious clothes and accessories therefore they are often given rented or second-hand clothes for their performances.

Market Analysis

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By product, the South Korea luxury market can be segmented into watches and jewelry, leather goods, perfumes and cosmetics, clothing, and eyewear, among others. Based on end-use, the South Korea luxury market is divided into women and men. On the basis of distribution channels, the luxury market of South Korea can be bifurcated into offline and online.

• LVMH Moët Hennessy

• Compagnie Financière Richemont SA

• Kering Group

• The Swatch Group Ltd

• ROLEX SA

• Minjukim

• Guccio Gucci S.p.A.

• Chanel

• Prada S.p.A

• Others

Market Share by Product

The growing use of social media for product promotions and the prevalence of e-commerce platforms are boosting the market for luxury goods in the country. Since the government uplifted social distancing regulations in the country, the leading department stores seem to be back on track as the sales are growing notably. The increasing demand for premium luxury goods is driving sales, and it is expected that the "revenge spending" will further boost the market growth in South Korea. Koreans are spending hugely on high-end fashion products and clothing.  Perfumes and cosmetics, clothing have a fair share in the market. The leather derived by natural means without harming any flora and fauna is gaining popularity among environmentally conscious customers. Eyewear, and jewellery are also popular among both genders in South Korea.

Market Share by End-use

Appearance plays a major role in making a good impression on others. In South Korea, irrespective of gender, people are very conscious of their looks and willingly spend on good quality skincare, cosmetics and hygiene products. Both men and women prefer wearing light makeup and invest in skincare items to improve and beautify their looks from within. Owing to high disposable income along with high living standards, all the luxurious products for both genders are anticipated to show ceaseless growth. 

Market Share by Distribution channel

Both online and offline channels are well accepted by consumers. However, after the COVID-19 pandemic, online distribution networks are aiding the market to follow a positive trajectory. With the busy lifestyle, many people prefer shopping from online portals to save time and the companies have also started providing seamless customer services from the comfort of their homes, making the exchange, return, or servicing process more customer friendly.

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Competitive Landscape

Rolex SA- Headquartered in Geneva, Switzerland, the company has been manufacturing premium watches since 1905, as Wilsdorf & Davis in London. The company was named Rolex in 1908. Currently, the company manufactures watches, clocks, precious stones, and personal and household goods, among others. Annually, the brand manufactures and sells more than 800,000 watches worldwide.

The Swatch Group Ltd.-The multinational company Swatch Group manufactures watches, jewellery, and watch components, among others. The company was established when ASUAG and SSIH merged in the year 1983. Omega, Longines, Tissot, Rado, and Hamilton, among others, are all subsidiaries of the Swatch Group. The brand operates in several regions across the world, such as Europe, the United States of America, Asia-Pacific, Middle-Eastern countries, and Africa. The headquarters of the Swatch Group are situated in Bienne, Switzerland.

Key Highlights of the Report