[Viewpoint] The MZ Generation and Luxury Consumption

Who Is the MZ Generation?
The Driving Force Behind the Luxury Market and “Flex” Culture

With the emergence of a 30-something opposition party leader in the political arena, there is a heightened interest in the MZ generation, which accounts for about 32% of our population. Who exactly is the MZ generation that is leading the luxury market, stock market, cryptocurrency market, and entertainment market? Why is the MZ generation so enthusiastic about luxury consumption?

First, the MZ generation is the first in modern Korean history to have experienced victories at a global top level. Having witnessed the 2002 Korea-Japan World Cup semifinals in their teens and twenties, they possess intense experiences of global-level victories. They started their lives in an economically advanced country, with achievements such as hosting the 2018 Pyeongchang Winter Olympics ranked 7th worldwide and having the 10th largest GDP in 2020.

Thanks to the spread of the Korean Wave, they experienced adolescence and their twenties in a country ranked within the top 5 globally in soft power. Therefore, it can be interpreted as a natural phenomenon that the luxury generation is enthusiastic about luxury consumption. Concerns from the baby boomer generation about overconsumption or consumer addiction are merely self-biased viewpoints. Of course, phenomena like lining up before 5 a.m. at luxury stores for opening runs are rare worldwide. However, experts analyze this as a demonstration of the strong consumer desire and behavior toward luxury brands, reflecting the dynamic pursuit of social status among Koreans.

Second, compared to previous generations, the MZ generation suffers from relative deprivation. For Koreans born in 1958, the Year of the Dog, who retired at 60, the average annual economic growth rate in Korea during their economically active years from age 30 (1988) to 60 (2018) exceeded 6%. However, for the Z generation born in 1995, even assuming a longer working life of over 40 years due to increased life expectancy, the average annual economic growth rate from age 30 (2025) to 70 (2065) is estimated to be around 1.5%. Their enthusiasm for high-priced cars, luxury bags, and premium experiential consumption, while giving up on purchasing homes, can reasonably be interpreted as a form of ‘small luxury.’ Especially, the suppressed consumer desire during the pandemic over the past 18 months has led to small luxury consumption in the form of luxury goods.

Third, the MZ generation is a connected generation known as digital natives. They are the protagonists of the hyper-connected era, linked in real-time with peers and acquaintances worldwide through Facebook and Instagram. Recently, luxury sales at the three major department stores increased by more than 50% compared to before, with the majority of this consumption led by the MZ generation.

The spread of social networking services (SNS) has created the unique MZ ‘flex’ culture. ‘Flex’ is a term from hip-hop culture meaning ‘to show off wealth or valuables.’ It means showing off what was hard-earned. People flex to gain recognition from others. However, the flex culture also includes attitudes of respecting others’ lives, sharing, gender equality, and environmental issues. As much as they prefer luxury goods, it can also be interpreted that they have aspirations for a fairer and better world. In short, the MZ generation are the Koreans who create and operate Premium Korea. It is hoped that they will contribute not only to the production and consumption of overseas luxury brands but also to ‘Made in Korea’ luxury products.