South Korea’s large luxury domestic market, steady influx of Chinese tourists and strong department store distribution model represents a unique opportunity for global luxury brands, according to new research by Exane BNP Paribas.
Interest in South Korea has grown substantially over the past decade, driven, in part, by the country’s unique melding of fashion, music, entertainment and celebrity. Indeed, only last month luxury goods giant LVMH bought a minority stake in Clio Cosmetics in a deal valuing the South Korean cosmetics maker at $700 million.
In 2014, the private equity arm of the French luxury conglomerate, L Capital, also invested around $80 million in YG Entertainment Inc, which manages Korean ‘idol’ musicians like Taeyang and G-Dragon.
South Korea is Asia’s fourth largest economy with a gross domestic product that almost matches that of Italy and a historically weak currency that has supported one of the highest trade account surpluses in the world, according to Exane BNP Paribas.
Over the past 10 years, average disposable income in South Korea has increased at a compound annual growth rate of 6 percent, helping to make South Korea a key opportunity for luxury brands.
The country accounts for around 5 percent of the global market for personal luxury goods. Seventy-five percent of this spending is concentrated in its capital Seoul and has grown two times faster than the country’s GDP.
(Source: Business of Fashion)