While the South Korean economy is struggling from the protracted trend of low growth, a completely different scene is being observed in the luxury industry. According to data, popular luxury products are flying off the shelves even though they come with a hefty price tag of over millions of won.
The Ministry of Trade, Industry and Energy has released data that shows that the sales of luxury goods by major importers accounted for only about 10 percent of the total in the first half of the year, but has been in the 20 percent level until October since it reached 23.6 percent in June. The sales of high-end products also had about 20 percent share of the total sales of department stores in the January-September period this year, the highest across all categories.
The continuously growing luxury goods market has also boosted the sales of the country’s major department stores. Lotte Department Store said its sales of luxury brands grew at the rate of 24.4 percent in 2019, while the figure was 5.5 percent in 2017. Shinsegae Department Store also saw its sales of luxury goods surge by 31.3 percent year on year.
What is noteworthy is the increased luxury consumption of “younger” consumers. Until a few years ago, high-end brands were usually consumed by those in their 50s and 60s, but today, almost all generations are enjoying luxury items. In particular, sales of premium products purchased by young consumers in their 20s skyrocketed. According to Shinsegae Department Store, sales of luxury items grew the most in the age group of 20s, 26.9 percent compared with last year. Lotte Department Store also presented the same result, whose consumers in their 20s spent lavishly 29.1 percent more than 2018.
These “young luxury” spenders also stand out in the jewelry and watch category. “Though even our entry model is high-priced at over 10 million won, consumers in their 20s and 30s are increasingly purchasing items,” an official from a luxury watch brand said. “It is to target these young consumers that high-end watch brands are now trying to tap social media and the online market.”
“Ironically enough, consumers try to leave room to buy something that can bring them certain satisfaction amid the protracted economic slump,” said Professor Lee Jun-young at Myongji University. “In today’s society, people purchase premium or luxury goods to lift their self-esteem, which results in ‘the restructuring of consumption.’” Professor Yeo Jun-sang at Dongguk University explained that people tend to long for symbolic items they can show off when the economy is going through slumps. “It seems we’re witnessing an extreme case of the ‘Veblen effect’ happening,” he said.
Yeun-Kyung Cho email@example.com