South Koreans Spend Most Per Capita on Luxury Goods

Move over China and Japan. By one metric, the biggest spenders on luxury goods in Asia live in South Korea. Additionally, for many designer brands sales revenue in that country have spiked in the past year. According to Morgan Stanley, overall spending on lux items there grew by 24% in 2022 to $16.8 billion.

Now, that’s clearly lower than the 2022 amounts spent in the United States and Europe. It’s even less than the spent in China – typically the leader in lux sales – notwithstanding the huge decline in sales in China due to health restrictions. For example, in 2022, China’s share of the luxury market declined from 21% to 17%, despite growth in the sector worldwide.

The calculation at issue here is the per capita – that is, per person – spending on luxury goods though. At $325 per capita, the South Korea numbers far exceed estimates for the United States ($280) and China ($55).

Morgan Stanley attributes this to two things: an increase in purchasing power of individuals in South Korea and a desire to display one’s wealth or social status. As you may recall, regarding the latter, this is unlike China where there are governmental and social pressures against flaunting money and materialism.

As a result, luxury brands are building their presence in South Korea. Additionally, designers have upped their collaborations with media and entertainment stars like K-Pop bands and social influencers. For example, members of the band New Jeans (sometimes referred to as the next Blackpink) have been named brand ambassadors to Louis Vuitton, Gucci, and Burberry. BTS members Jimin and Sugar were signed as ambassadors to Dior and Valentino, respectively, and the list goes on.

Whether South Korea truly will give China a run for its money remains to be seen. After all, China’s population is far greater. Moreover, as restrictions ease in the latter, luxury purveyors expect sales to skyrocket back. In other words, brands are still betting on China even as they focus more on South Korea.

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Photo courtesy: cnbc.com