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Luxury goods

Millennials now S.Korea’s largest buyer of luxury goods

Male consumers are behind the rise of the 20s and 30s as a major spending group in the luxury, retail and golf markets

By Sep 14, 2021 (Gmt+09:00)

Male consumers shop at a major department store in Seoul
Male consumers shop at a major department store in Seoul

The millennials have become the largest spending group of luxury goods at department stores in South Korea.

According to joint research by The Korea Economic Daily and Shinhan Card Big Data Center, the age group between 20 and 39 made a higher number of purchases worth more than 1 million won ($853) than those aged between 40 and 69 in the channel during the first half of 2021.

During the given period, the female customers in their 20s and 30s accounted for 29% of all purchases over 1 million won per transaction, making them the biggest spender. They were followed by female customers aged between 40 and 69, taking up 26% of the total. A similar pattern was observed among the male customers, with those in their 20s and 30s with 25% taking up a higher portion than those aged between 40 and 69 with 20%.   

While those in their 20s and 30s account for only 26.4% of the country’s population, with lower levels of wealth and income compared to the older generations, their ascension as the largest buyer of luxury items is driving some key changes in Korea’s retail and financial sectors from product offerings to marketing strategies.

Five years ago, in 2016, the proportion was starkly different. Women in their 40s, 50s and 60s led the expenditure, taking up 38% of all purchases over 1 million won in transactions. The men in their 20s and 30s were the lowest group with only 17%, even lower than the male peers in their 40s, 50s and 60s with 20%.  

Market analysts say that the rise in young male consumers in the high-end retail scene is particularly noteworthy. Over the past five years, the number of purchases over 1 million won made by the group grew by more than 300%, about three times the national average at 106%. This generation is also becoming a major spending group in consumer electronics and golf markets.

In July, Lotte Department Store's main branch remodeled its fifth floor to target male consumers looking for luxury items.
In July, Lotte Department Store's main branch remodeled its fifth floor to target male consumers looking for luxury items.

“We are living in a world where Gucci is showcasing items on metaverse platforms and the virtual human Rozy is a popular icon in the advertising scene. The companies will continue to focus on attracting the MZers,” said professor Lee June-young at Sangmyung University.

Shinhan Card’s big data analysis also showed that the amount of spending by the 20s at golf clubs also increased by 98% over the last five years, the highest figure among all age groups. The growth rate was 57% for the 30s, 32% for the 40s, 58% for the 50s and 47% for the 60s.

While the 20s and 30s still take only 11% of the total money that the country spends at golf clubs, compared to those over 40 at 89%, analysts say that the golf companies, including the golf wear makers and screen golf companies, are already focusing on attracting younger generations with tailored products and services.  

The Big Pilot Bar was set up by the watchmaker IWC at Lotte Department Store's main branch.
The Big Pilot Bar was set up by the watchmaker IWC at Lotte Department Store's main branch.

OLDER GENERATION IMITATES YOUNGER GENERATION’S SPENDING
 
The data also showed that while the country’s younger citizens are making inroads into luxury spending, the older generations are becoming more like the millennials in their expenditures.

Online shopping is a representative example. In 2016, the online channel accounted for only 13% of the purchases made by the shoppers in their 50s, and only 7% for those in the 60s. The figures almost exactly doubled in just five years, with 26% for the 50s and 14% for the 60s.

The younger generation’s almost never-ending love for cafes and desserts has also enthralled the older group in South Korea. In 2016, only 6.8% of the spending on food by those in their 50s was on cafes, bakeries and desserts, whereas the figure grew to 9.2% in the first half of 2021. The figure for those in their 60s also grew from 6.1% to 8.6% during the given period.

Financial experts also note that the high levels of attention that the country’s university students currently have towards cryptocurrency and metaverse-themed stock investments are, in turn, driving their parents to increase investments in these areas.

Others say that the consumer electronics sector is showing a similar pattern. They note that while the market has been noted by a top-down purchase pattern where the consumers usually bought the brands used by their parents, like Samsung TVs, the market is now highlighted by a bottom-up pattern where children are influencing the decisions of the parents.

Write to In-hyeok Lee at twopeople@hankyung.com

Daniel Cho edited this article.

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