Three Companies Report 20% Growth in Luxury Sales Last Year
Luxury Consumption Continues to Rise Among MZ Generation
Despite concerns about consumer slowdown due to high inflation, the department store industry's luxury goods sector continues its undefeated streak. Over the past few years of high growth, luxury consumption, especially among younger generations, has established itself not as a temporary trend but as a culture, achieving an additional growth of over 20% last year.
According to the industry on the 1st, Lotte Department Store's luxury category sales last year increased by 25.0% compared to the previous year. Despite a 35% high growth the year before, it achieved an additional growth of over 20%. Lotte Department Store's luxury sales have maintained high growth rates of 20-30% in recent years. The luxury category grew 15% in 2018 compared to the previous year, increased by 30% the following year, and continued with high sales growth rates of 25% in 2020 and 35% in 2021. Shinsegae Department Store and Hyundai Department Store have also maintained annual high growth rates of 20-40%. Shinsegae Department Store's luxury sales increased by 21.1% last year compared to the previous year, and Hyundai Department Store grew by 22.3% during the same period.
Recently, domestic luxury consumption has been led by younger generations who are sensitive to trends and do not hesitate to invest in what they consider valuable. Centered on people in their 20s and 30s, the so-called 'flex' phenomenon?consuming lavishly for oneself?has become a consumption culture beyond a temporary trend, continuously increasing demand for luxury goods. Additionally, revenge spending due to the pandemic has also contributed to the rise in luxury consumption.
An industry insider explained, "As overseas travel became difficult due to COVID-19, luxury consumption gained even more sensational popularity. During this time, new consumers, including young people in their 20s and 30s and men, began actively purchasing luxury goods beyond existing customers. These consumption patterns have continued steadily even after the transition to endemic."
Lotte Department Store Avenuel Louis Vuitton Store.
Recently, an analysis revealed that South Korea is the country with the highest per capita luxury consumption in the world. According to a recent luxury consumption analysis report by global investment bank (IB) Morgan Stanley, South Korean luxury consumption last year was estimated at $16.8 billion (approximately 20.68 trillion KRW), a 24% increase from the previous year.
Per capita luxury spending was also estimated at $325 (about 400,000 KRW), surpassing the United States' $280 (about 283,000 KRW) and China's $55 (about 68,000 KRW), ranking first worldwide. The report analyzed that South Korea has become as important to luxury companies as Japan, which has more than twice the population, accounting for over 10% of retail sales of top brands such as Prada, Moncler, and Burberry.
In this regard, Bloomberg analyzed that the surge in asset values due to skyrocketing housing prices during the COVID-19 pandemic was a cause of increased luxury consumption. It explained that South Korea's younger generation, giving up on purchasing homes, turned to high-end product consumption, which further boosted luxury demand.
The department store industry plans to continue negotiations to expand luxury brands while making efforts to offer new content to customers through luxury brand pop-up stores and other initiatives. Lotte Department Store, which has been strengthening its luxury product lines mainly at key stores, opened a new 'Women's Overseas Fashion Hall' at its main branch in June last year and plans to gradually renew and unveil the luxury specialty hall 'Avenuel' in the future. Hyundai Department Store recently introduced the French luxury shoe brand Christian Louboutin's pop-up store at The Hyundai Seoul, marking the first and largest scale in Asia.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
