There’s a new epicenter of luxury spending: South Korea.
According to new data collected by Morgan Stanley, South Koreans are now the kings and queens in luxury—at least as far as spending money goes. The investment bank has revealed that spending on luxury goods in the country increased by 24 percent in 2022, equating to $16.8 billion in revenue, or $325 per capita, outpacing their Chinese and American counterparts.
The report asserts that this rise in spending is driven by a desire to clearly display a high socio-economic status through luxury brands. “Appearance and financial success can resonate more with consumers in South Korea than in most other countries,” analysts wrote in the report, according to CNBC. The demand is also a response to the increase in wealth for Korean households. According to data from the Bank of Korea, the average household net worth rose by 11 percent in 2021.
And South Korea’s spending helped ease the pain of China’s Zero-Covid policy for some luxury brands. Prada pointed to China’s restrictions as a reason why its retail sales fell 7 percent in 2022, but the company says strong performance in South Korea and South East Asia prevented the decline from being worse.
With growing demand in the country, many brands cater to consumers by directly courting South Korean shoppers. For example, Dior recently announced that BTS star Jimin would be the new global ambassador for the luxury house in response to the country driving sales.
Brands like Louis Vuitton and Gucci have even released new items in Japan or South Korea before opening them for worldwide release. The Richemont Group, which owns Cartier and Piaget, stated that the group’s most significant region in terms of sales was the Asia Pacific, including South Korea, which contributed to 41 percent of group sales.
This comes when many luxury brands await to see what the return of Chinese tourists will bring since the country has relaxed its zero-Covid policies allowing nationals to travel internationally again. Ultimately, Morgan Stanley sees the performance of luxury brands in South Korea as a good preview of what a reopened Chinese market will look like.