Celebrities Wearing Luxury Brands, Chanel Bags Already in Their Teens?…Accelerating Luxury Consumption [Cheongchun Report]

Decreasing Age of Luxury Consumption
Luxury First Encountered by Teens and 20s
"Concerns Over Overspending"... Also Negative Views

The age group consuming luxury goods, once known as the exclusive domain of the wealthy, is gradually getting younger. In the past, luxury goods were primarily consumed by middle-aged and older adults with financial means. However, as luxury brands have become more mainstream and demand has increased, not only young professionals but also teenagers have shown a strong preference for so-called 'Erusha' (Herm?s, Louis Vuitton, Chanel) and other luxury brands.

South Korea's luxury market ranks 7th globally... Young luxury consumers on the rise

Idol group NewJeans. [Image source=Yonhap News]

Koreans' love for luxury goods is well-known worldwide. According to the global market research firm Euromonitor, South Korea's luxury market size was approximately 18.6 trillion KRW last year, ranking 7th in the world. This indicates that South Korea holds a significant share of the global luxury market.

South Korea also leads the world in per capita luxury spending. According to an analysis by the US investment bank Morgan Stanley, South Korea's per capita luxury spending last year was $325 (about 420,000 KRW), far surpassing the US ($280) and China ($55).

Consequently, luxury brands operating in South Korea also saw soaring sales. The combined sales of the three major luxury brands known as 'Erusha' reached 3.9337 trillion KRW last year, nearing 4 trillion KRW. The average operating profit margin of these three companies was 28%.

As luxury goods have become more mainstream, the age at which people first encounter luxury items has also been getting younger. A survey on luxury consumption awareness conducted by Embrain Trend Monitor among 1,000 adults nationwide found that most people first encounter luxury goods in their 20s, either as office workers (45.6%) or university students (35.8%).

The proportion of those who first encountered luxury goods during their teenage years was also not insignificant. High school students accounted for 26.0%, middle school students 17.6%, and elementary school students 11.7%. Despite having lower purchasing power compared to other age groups, teenagers are easily owning and purchasing luxury goods.

[Image source=Yonhap News]

This phenomenon is also easily observed on social networking services (SNS). Recently, luxury purchase vlogs and haul content by teenagers have been continuously uploaded on platforms like YouTube. The videos garner anywhere from tens of thousands to millions of views. These creators often visit expensive hotels and restaurants, showcasing their luxury bags, clothes, and shoes. They also provide reviews of the luxury products they have personally purchased.

K-pop stars loved by luxury brands... Increased interest among teenagers

The reason for the younger age group encountering luxury goods is often attributed to 'SNS.' A significant number of young people share their daily lives on SNS platforms like Instagram while frequently seeing celebrities adorned in luxury items. This process increases their desire to own luxury goods and heightens their interest.

In particular, K-pop stars admired by teenagers serve as ambassadors for luxury brands, further boosting interest among teens. Currently, all members of the idol group NewJeans are luxury brand ambassadors for famous brands such as Burberry and Dior. BLACKPINK members also serve as ambassadors for brands like Chanel and Celine.

However, there are also many critical views of this trend. Critics argue that luxury brand ambassador marketing encourages overconsumption among teenagers and causes feelings of relative deprivation.

Some parents have expressed difficulties regarding their teenage children's love for luxury goods. A housewife raising a third-year middle school son shared on a mom caf? in Incheon, "My son seems increasingly interested in brands and luxury goods. When I told him he couldn't buy expensive sneakers, he said he would buy them even if he had to work part-time. At times like this, I wonder if I should just let him buy them."

"By 2030, MZ generation will consume 80% of luxury goods," forecast

On May 13, 2020, luxury brand Chanel announced a price increase, and customers lined up in front of the luxury goods hall at the Lotte Department Store main branch in Jung-gu, Seoul. [Image source=Yonhap News]

Meanwhile, the love for luxury goods among the 10s and 20s age group is not limited to South Korea. Globally, as the age of luxury brand consumers decreases, some predict that by 2030, the post-MZ generation (born from the early 1980s to early 2010s) will become the main consumers of the majority of luxury goods.

In January, global consulting firm Bain & Company released a report forecasting that "by 2030, younger generations (MZ generation and younger) will account for 80% of global luxury fashion brand sales."

The firm predicted that the consumption share of Generation Z and the subsequent Alpha generation (born after 2010) will account for about one-third of luxury consumers by 2030. The company also forecasted that "due to the spread of SNS and online sales platforms, the tendency to consume luxury goods at a young age will continue with the Alpha generation."