US CNBC Broadcast Citing Morgan Stanley Survey
"Due to Increased Purchasing Power and External Display Trends"
South Korea was analyzed as the country with the highest per capita luxury goods consumption in the world last year.
According to US CNBC on the 12th (local time), investment bank (IB) Morgan Stanley estimated that South Koreans' luxury goods consumption last year increased by 24% from the previous year to $16.8 billion (about 20.9 trillion won). When converted to per capita spending, it amounts to $325 (about 404,000 won). This is approximately 5.9 times China's $55 (about 68,000 won) and $45 (about 56,000 won) more than the United States' $280 (about 348,000 won).
The appearance of a luxury brand store in a department store in Seoul (Photo is not related to the specific content of the article)
In fact, Italian luxury outdoor brand Moncler announced that its sales in South Korea in the second quarter of last year more than doubled compared to before the COVID-19 pandemic. The Richemont Group, which owns the French luxury brand Cartier, also stated that "South Korea was one of the regions with double-digit sales growth last year compared to 2020 and 2021." Italian luxury brand Prada reported that although retail performance in China decreased by 7% last year due to COVID-19 lockdowns, the high performance in South Korea and Southeast Asia offset this decline.
Morgan Stanley attributed the increased luxury purchases in South Korea to the rise in purchasing power due to wealth growth. Since 2020, household net assets have increased due to the surge in real estate prices in South Korea. Morgan Stanley explained, "The demand for luxury goods in South Korea is driven by increased purchasing power and the desire to outwardly display social status." They added, "Luxury brands are encouraging consumption by utilizing celebrities," noting that "almost all famous Korean celebrities are ambassadors for luxury brands."
CNBC also cited a survey by the global consulting firm McKinsey & Company, stating that South Korea is a country where the display of wealth is socially accepted. According to the McKinsey survey, only 22% of South Korean respondents thought "showing off luxury goods is not good," which is much lower compared to 45% in Japan and 38% in China.
There are also opinions that using the "per capita consumption" indicator for luxury goods consumption, as in Morgan Stanley's survey, is inappropriate. Weiwei Sing, a partner at consulting firm Bain & Company, told CNBC, "By definition, luxury goods are not mass-market products," and pointed out, "To more meaningfully understand attitudes and consumption of luxury goods, it is preferable to measure total luxury spending divided by the middle class and above population."
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