South Koreans are the world’s biggest spenders on luxury goods

Whether it is calf-leather Italian Prada baggage or traditional, checkered British Burberry trench coats, South Koreans are the world’s greatest spenders on private luxurious items per capita, Morgan Stanley mentioned.

The funding financial institution estimated South Korean complete spending on private luxurious items grew 24% in 2022 to $16.8 billion, or about $325 per capita. That’s way over the $55 and $280 per capita spent by Chinese and American nationals, respectively, in response to Morgan Stanley estimates.

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Luxury manufacturers have additionally highlighted robust gross sales in Korea.

Moncler mentioned its income in South Korea “more than doubled” within the second quarter in contrast with earlier than the pandemic. Cartier-owner Richemont Group mentioned Korea was among the many areas the place gross sales grew by double digits in 2022, in contrast with each a yr and two years in the past.

While Prada mentioned China lockdowns contributed to a 7% decline in 2022 retail efficiency, the style home mentioned the drop was “mitigated by the strong performance in Korea and South East Asia.”

Displays of wealth are additionally extra socially acceptable in Korean society. A McKinsey survey discovered that solely 22% of Korean respondents think about exhibiting off luxurious items to be in dangerous style, in contrast with 45% of Japanese and 38% of Chinese.

The demand in luxurious wares was additionally supported by the rise in family wealth. Bank of Korea knowledge exhibits the nation’s family web value rose 11% in 2021. About 76% of family wealth in Korea is in actual property, costs for which have elevated considerably since 2020.

The funding financial institution additionally famous luxurious homes have tapped Korean icons to additional catalyze demand.

“Nearly all of the major Korean celebrities are brand ambassadors of the leading luxury houses,” the report famous, like Fendi and actor Lee Min-Ho or Chanel and rapper G-Dragon.

Dior made Blackpink singer Rose the face of its ArduousWear assortment, which the style home mentioned was “very well-received” and doubled gross sales for the road.

However, Bain & Company cautioned towards using per capita metrics for luxurious good consumption.

“Luxury by definition is not a mass market product,” Bain & Co associate Weiwei Xing instructed CNBC.

“I would suggest to prorate the total luxury spending by number of population that’s middle class and above, which would be a more meaningful measure to reflect attitude and consumption towards luxury,” Xing mentioned, including that would chop the hole.

Globally, McKinsey projected the luxurious market to develop between 5% and 10% in 2023, buoyed by demand from the U.S. and China.

“We expect growth to resume after China recovers from the current Covid waves, which should happen by the first quarter,” Xing mentioned.