If 2022 has been the year that kicked off a K-pop frenzy, 2023 might just get even crazier.
Outside Fondazione Prada, the show venue for Prada men’s fall 2023 fashion show, crowds erupted as members of the seven-member boy band Enhypen stepped to greet fans. The group, which consists of Heeseung, Jay, Jake, Sunghoon, Sunoo, Jungwon and Ni-ki, made its debut last November and has more than 11.5 million fans on Instagram.
In recent years, the influence of K-pop, especially K-pop girl groups, has become more visible in the global luxury market.
Over the last few years, nearly all popular South Korean idols have been anointed ambassadors at one or several luxury brands. Lisa, Jennie, Rosé and Jisoo of Blackpink, members of the world’s most popular all-girl group, has secured partnerships with top luxury brands such as Celine, Chanel, Dior and Saint Laurent.
Competition is heating up to secure the next South Korean idol as the face of luxury brands. In recent months, NewJeans, a five-member girl band often billed as the next Blackpink, has seen its members Hyein, Hanni and Danielle named ambassadors at Louis Vuitton, Gucci and Burberry, respectively.
According to industry insiders, the remaining members of NewJeans, Minji and Haerin, will likely secure ambassadorships with Chanel and Dior separately.
Within the last week alone, Dior has signed BTS member Jimin as a global ambassador; Valentino also named BTS member Suga as a brand ambassador, and Givenchy unveiled Taeyang, a member of Big Bang and a solo artist, as its newest brand ambassador.
Top entertainment studios, such as YG Entertainment, SM Entertainment and JYP Entertainment, often spend years recruiting and grooming talent through an intense elimination process.
After a seven-year hiatus, Blackpink’s agency, YG Entertainment, dropped teasers for a seven-member girls’ band called Babymonster on Jan. 1. The new group’s reveal video quickly amassed more than 28 million views on Youtube.
According to Kim Seiwan, an economics professor at Ewha Womans University’s estimate, the K-pop phenomenon generates about $10 billion annually for the country.
“K-culture has now become a powerful marketing method targeting APAC consumers, and this trend is expected to continue and be stronger during post-pandemic in 2023,” said Sunny Moon, research manager at Euromonitor International Korea.
All eyes are on the Korean market, with luxury brands planning to stage more destination shows this year.
In May, Gucci will stage its cruise show in South Korea to mark the brand’s 25 years in the country after canceling the original event planned for last November due to a tragic stampede in Seoul killing more than 150 people. According to local public relations agencies, Saint Laurent is also considering putting on a fashion show in South Korea this year.
“South Korea has been the leader across Asia in recent years. If you have South Korea, you have the northeastern Asian market,” Jacob Cooke, chief executive officer of WPIC, a Beijing-based e-commerce consulting firm, told WWD recently.
After the pandemic, the local luxury market has registered upbeat growth results. According to Euromonitor, luxury retail value sales in South Korea, which excludes duty-free shopping and the resale market, is projected to grow 8 percent year-on-year to 19.4 trillion South Korean won, or $15 billion, in 2022.
According to a Morgan Stanley report published this month, with a vibrant middle-class and upper-middle-class demographic, South Korean nationals are now the world’s biggest spenders per capita on personal luxury goods. At $325 per capita, it is higher than $280 in the U.S., $210 in Japan and $55 in China.
Morgan Stanley estimates that South Korean nationals now account for “10 percent or more” of the brand’s total retail sales for Prada, Bottega Veneta, Burberry and Moncler.
“At an estimated 5 percent, Vuitton was likely below the industry average, a function of the broad geographical reach of the brand,” the report added.
Increased investment in the market, including fashion shows, pop-up stores and hospitality offerings, helped elevate the appeal of leading luxury brands and reach their growth targets.
Louis Vuitton launched a pop-up café at its Seoul flagship in Gangnam last March, followed by a pop-up vegetarian restaurant at the brand’s Seoul maison last September. Also in March, Gucci opened its fourth Gucci Osteria outpost on the top floor of its Gucci Gaok flagship.
For Dior, with the opening of the expansive Seongsu-dong pop-up store, signing on Blackpink’s Jisoo as brand ambassador and holding its first fashion show in Seoul, the LVMH crowned jewel has become the “fastest-growing player in the market,” according to the Morgan Stanley report.
“We believe the brand’s [Dior’s] sales have potentially multiplied by eight times over the past five years,” wrote the report.
The rise of Generation MZ, a group term for Gen Z and Millennials, became a crucial driver for the market. “Brand awareness has increased not only as brands have efficiently utilized social media platforms as a marketing tool, but also as young customers post their shopping items on social media platforms,” wrote the Morgan Stanley report.
According to Shinsegae, a major fashion department store franchise, sales from Generation MZ reached nearly 40 percent of total luxury sales in 2021, up from less than 30 percent of the sales mix five years ago.
Riding the “Hallyu” (or Korean culture) wave and after more than a decade’s healthy organic growth in the market, Our Legacy, the cult Swedish label, took the leap and opened three shops-in-shop in Seoul last year.
The three retail locations, located within Hyundai Department Store Apgujeong Main Branch, Hyundai Department Store Pangyo and Galleria Luxury Hall East, aim to create a sense of serenity and intimacy “in a chaotic world,” according to the brand’s press release.
Richardos Klarén, CEO of Our Legacy, revealed that the brand had seen double-digit growth since the locations opened.
Working with Handsome Corp., the fashion division of Hyundais Department Store, which is the largest fashion group in South Korea and the brand’s longtime wholesale partner, Our Legacy has plans to open a flagship store in downtown Seoul, featuring Our Legacy’s main line and the Our Legacy Work Shop collection.
“Our brand and product sit well with the market. We’ve also been inspired a lot by Asia, which is what drew us to the South Korean market in the first place,” Klarén said. “When it comes to music, films, beauty, food, South Korea really stands out in terms of the level and pace of development.
“Maybe it’s a word used too much, but I think a minimalistic approach to fashion is a good foundation to have in the market, but we try to push it quite a lot fashion-wise as well,” Klarén added.
Partnering with Handsome Corp., American designer brand Gabriela Hearst has picked South Korea as its first stop in the Asia market.
The retail residence, located within Hyundai Department Store Apgujeong Main Branch and launched last December, recorded sales “seven times” that of other stores on its opening day, Hearst told WWD in a recent interview. “This is without any marketing campaign,” she said.
According to local media reports, the Nordic fashion brand Totême and the New York-based contemporary label Veronica Beard has also inked deals with Handsome Corp. to roll out shops in Seoul.
Under inflation pressure, housing market headwinds and in the face of a global economic downturn, Morgan Stanley expects local consumption to be under pressure in 2023. Euromonitor’s Moon also expects more local consumers to opt for affordable luxury goods, including in the handbag and luggage categories.
But the Korean luxury market could still benefit from pent-up demand from Chinese tourists after borders reopened on Jan. 8.
“Even though China fully opened its borders, there will be a limitation on the speed and scale of Chinese tourists rebounding in the short run,” said Moon, citing tightened rules toward Chinese travelers to control new inbound COVID-19 cases.
Moon predicts the duty-free shopping segment will most likely bounce back in the second quarter and “significantly affect the luxury market, particularly fashion and beauty industries.”