Market Insights: Pound for pound, South Korea is a luxury heavyweight


From an LVMH perspective, we still have a lot of brands that are very underdeveloped in Korea. So, we continue to have great belief in the market. Celine has substantial growth because it’s in the early stages of its development in Korea. Louis Vuitton and Dior are performing at exceptional growth rates. All of our fashion brands are performing exceptionally with no exception.

The Web3 ecosystem

The taste for experiences translates online, and Korea is home to key players in the metaverse. 3D avatar platform Zepeto has partnered with a number of Western brands including Ralph Lauren, Gucci and Bulgari to bring their designs into the virtual world.

“Many luxury and global brands like to work with us because we have a uniquely strong hold on millions of actual Gen Z female audiences in APAC, Europe and the Americas that are highly interested in fashion and beauty” says Ricky Kang, head of business at developer Naver Z, which owns 3D avatar app Zepeto, noting that users create thousands of pieces of branded user-generated content for fun.

Kang adds: “Korea has always embraced gaming as a medium of communication and socialisation, giving us an intuitive understanding of what metaverse could be, making it easier to jump on. Socialization and hanging out with your friends in virtual worlds has been a socially acceptable and familiar experience for many Koreans, long before the buzzword.” There’s also startup Altava on luxury’s map, which designed LVMH’s virtual ambassador in 3D named Livi to be the face of all the group’s innovation strategies.

Outlook

Brands should enter the Korean market well prepared and with hefty budgets. “Korea requires an understanding of a complex digital ecosystem and specific strategies on [platforms such as] Kakaotalk, Naver and Coupang. It also requires finding the right distribution platform, whether it’s SSG (Samsung), Lotte or Huyndai,” says Olivier Mouroux, CEO of digital agency Asiance for Korea and Japan whose clients include Louis Vuitton, Balenciaga and Van Cleef & Arpels. Mouroux adds that the fan acquisition cost on Kakaotalk has been multiplied by ten since 2018.

Mouroux, who has been based in Korea for 21 years, says Seoul has become a true hub in the APAC region, alongside Singapore. Shanghai and Hong Kong by comparison have experienced a luxury executive exodus in recent months.

Mouroux is confident the local market will continue to boom and Chinese tourists will return to Korea once restrictions are lifted. Mario Ortelli, managing director of luxury advisory firm Ortelli & Co., agrees: “I believe that the growth prospects of Korea are good and when Chinese can travel again without limitations there will be a further great acceleration in sales.”

HSBC’s Rambourg says: “While we believe that growth has to start landing in the second half of 2022 for reasons linked to a steep basis of comparison, we remain optimistic about the prospects of luxury in that market for the long term. Korea is a society with balanced wealth, which makes the target market for luxury quite broad. Men are particularly under-represented for now, so that is a specific opportunity… Korean culture (K-pop, cosmetics, K-drama) continues to resonate in the region and we feel Korea alongside Japan will be a destination of choice for Chinese travelers as and when they will reappear.”

To receive the Vogue Business newsletter, sign up here.

Comments, questions or feedback? Email us at feedback@voguebusiness.com.

.

Leave a Comment

Your email address will not be published. Required fields are marked *