| People line up in front of the Shinsegae Department Store in Seoul, in 2021, to enter its luxury boutiques. Newsis |
Millennials, Gen. Z lead buying trends, making Korea one of the biggest luxury markets in the world
By Lee Yeon-woo
Koreans' love of luxury goods is visible in almost all aspects of their everyday life. According to global management consultancy McKinsey & Company, Koreans are relatively fond of luxury products, with only 22 percent of them saying it is in bad taste to show off pricey clothes and accessories. This is lower than those in Japan (45 percent) and China (38 percent).
They have now become the biggest spenders on luxury goods per capita, outgrowing markets in China and even the U.S. Total personal luxury goods spending by Korean nationals increased 24 percent to 21.8 trillion won ($16.8 billion) in 2022 ― about 400,000 won ($325) per person ― according to a recent study by Morgan Stanley.
While luxury goods purchases had been considered the preserve of the middle class, millennials and Gen Z, commonly called "Generation MZ" here, have recently emerged as a notable consumer demographic leading this market boom.
"I bought my first luxury bag in my 20s when I got my first salary. I decided there would be occasions when I would need a good bag after starting my career. I have regularly bought luxury bags, both high and moderately priced ones, once or twice a year since then," Jang, a 32-old-year office worker based in Seoul told The Korea Times.
"I know they're expensive compared to my salary, but they give me confidence. I consider them as a gift to myself after working hard day and night," Jang added.
According to Shinsegae, Generation MZ accounted for almost 40 percent of total luxury sales in 2021. Luxury goods purchases by customers in their 20s have doubled every year, far exceeding overall luxury sales growth since 2016, when customers in their 30s became the largest buyers, Morgan Stanley stated.
| People wait to enter a MONCLER shop at the Lotte Department Store in Songpa, Seoul in 2020. Korea Times file |
Kwak Geum-joo, a professor of psychology at Seoul National University, explained it as a cultural difference between generations. She said while older people have developed the habit of saving money to survive economically tough periods, younger generations, born in affluent times, are more interested in spending money to treat themselves.
"They think it's an investment in themselves. They are willing to pay money if the product brings them satisfaction and joy. They think it's worth it," Kwak said.
Displaying wealth is also acceptable, and sometimes encouraged in Korean society. According to research by Economic Affairs in July 2022, more than 60% of Koreans believe that it is "fairly important" or "very important" to be seen as rich.
"Once when I was going to a friend's wedding, I found myself constantly checking whether my outfit looked good, whether it was too old, or whether the outfit made me look as if I was struggling financially. That's when I first felt the necessity to buy luxury goods," Kim Joo-yeon, 29, said.
"Appearance and financial success can resonate more with consumers in Korea than in most other countries," Morgan Stanley's report reads.
Social media fuels this tendency. Young customers post their purchases on social media, and luxury brands efficiently utilize the platform as a marketing tool.
"In a groupist culture like Korea, people care about how others view them. Nowadays we have more chances to see what others are doing, and more chances to show what we are doing through social media. The satisfaction of showing themselves engaging with luxury goods on social media is much larger than doing so in normal life," Kwak said.
However, it's not necessary to dwell on the negative aspects of luxury spending, according to Kwak.
"The problem is spending too much money on luxury goods compared to one's income. Saving some money while spending the rest on what gives satisfaction; I think that's wise consumption," Kwak said.