South Korea has steadily grown as a demanding luxury goods market, a new study has found.
Research by McKinsey and Company found sales of luxury products in South Korea have gone up by at least 12% every year since 2006. Sales reached an estimated $4.5 billion (£2.9 billion) in 2010 and in the first four months of 2011 department store sales were up more than 30% on last year.
The study showed that South Korean’s spend more of their household income on luxury (5%) than Japan (4%), where the luxury market has been stagnant in recent years.
Brands which have been performing well in South Korea include LVMH and Ferragamo, while sales of other big names, such as Gucci Group and Dior, dropped in 2010. The mixed consumer response to established luxury labels had created uncertainty over the solidity of South Korea as lasting luxury market. However the McKinsey study identified trends showing growth in the sector is sustainable.
The research also found thta South Korean consumers are increasingly willing to try out new brands and want more distinctive products that are value for money.
“The desire for more individuality is leading to the introduction of new luxury brands, making the market more competitive.” wrote researchers Aimee Kim and Martine Shin. “Contemporary brands, such as Miu Miu, that target younger customers or designer fashion houses such as Alexander McQueen, have made strong entries into the market.”
For the survey, McKinsey surveyed 1,000 South Koreans, for two years running, who had purchased at least £1 million Korean won (£595) in luxury goods in the past year across four categories: fashion, leather goods, shoes and watches/jewelry. Some 200 of the respondents “heavy purchasers” of those who
had spent at least 10 million South Korean won (£5,548). They also interviewed 24 senior executives of luxury-goods companies.