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A man looks a display of a luxury brand in Tokyo. / AP-Yonhap |
By Nicole Fall
Contributing Writer
We have entered a new economic era. A period when the adage ``more is good'' no longer resonates and in which conspicuous consumption is starting to be viewed as repulsive amid the world's harsh new realities.
As South Korean companies scale back on international expansion plans and consumers tighten purse strings in anticipation of a grim 2009, this new era of ``Controlled Luxury'' will see people here in South Korea and throughout the developed world become increasingly thoughtful when making daily consumption choices and measured with the purchase of larger ticket items.
It is a time when the logos and egos of luxury brands will start to look old-fashioned as people decide that luxury is no longer defined by the purchase of a designer product but is representative of something that is far more personal.
Luxury purveyors of goods and services that were once so special and difficult to obtain but then became more ubiquitous than a convenience store bought snack will be hardest hit by this sea change.
This new paradigm will mean that luxury, a noun overused in today's world, will no longer be used to sell everything from soap to socks but instead within the context of a specific environment, become an adjective for how we feel at the time of purchase or usage.
Going forward, we can safely assume South Koreans will pare back on services and brands that misuse the word luxury, especially at hotels that charge high room rates yet still expect us to feel a warm, fuzzy feeling about the hotel brand upon check-out, only to discover we have been charged for Internet access and breakfast, no longer extras in this day and age, but necessities.
How will our responses rate on customer service surveys at hotels that try to convince us with their brand messages they act as a home away from home then charge for extortionately priced breakfast ― for I am racking my brains remembering the last time I paid $25 for a bowl of cereal in my kitchen. And as for hotels charging ridiculously high Internet access fees that do not reflect actual cost, this starts to feels more like an insult along the same lines as charging us to turn on the television or hairdryer.
Let's not dwell on the outmoded and outrageous table charges for the privilege of sitting at a bar for a cocktail twice the market price at the city's trendiest spots. If there is a positive to this crisis, it is the reawakening that it is no longer smart to overpay for products and services merely because they are fashionable or been labeled with the luxury tag. Instead, consumers will patronize outlets that offer value for money and also offer a memorable experience.
And to the car brands that once represented an area of individuality among personal expenditure, after all, our car choice was considered the mobile representation of our homes and generally speaking, the second largest purchase after the roof over our head. Who truly feels special driving a car that our neighbors, co-workers and friends also own?
Will we be sorry to see fewer designer handbags slung over the shoulders of young women who instead of saving for their future were instead building debt with credit card companies. The same designer accessories that were once crafted with care in the ateliers of Europe and held strong brand values dear to the buyer's heart, but are now systematically churned out in Asian factories in gargantuan quantities that can be purchased from any trendy shopping thoroughfare in our city.
New Opportunities
Yet despite all the doom and gloom, this new era of thoughtful spending brings opportunity. While people throughout the developed world have been shaken to their senses by the realization that the zeros that were being rapidly added to their property and equity portfolios, and consequently they borrowed on, were as fake as the bags found at street stalls in this city, there is still room in this ``huddle down'' era for brands to shine.
In fact, now more than ever, it is critical to stand out from the pack. Not just as an individual searching for a job or even as a person trying to keep an existing position, but from a brand point of view too. During this current adversity South Korean retailers, manufacturers and brands that develop tactics to combat consumption fatigue have a real advantage in carving out a niche to dominate the marketplace of the future, both here and overseas.
By utilizing consumer insights, and there are many from this spending binge and its subsequent post consumerism hangover, we distil what people want from a retail and service experience. After all, we still need clothes, food and indulgences, just fewer of them.
What we may learn is there is no gratification in buying one in each color, or stocking up unnecessarily just to keep cupboards full or buying a second home you never get the chance to use. What we see is that the symptom of uncontrolled spending is guilt that later manifests itself in unhappiness because it appears the more we have the less we appreciate.
So, here's the reality. We have all overeaten and now we are collectively purging on over consumption. As we look in our closets, we ask ourselves, will we return to the stores that we bought sweaters from that pile up unused at the back of our cupboards? More than likely not. Nor will we use the services of companies that were never that good to begin with but we continued to use out of convenience. In this ``Controlled Luxury'' era, we will walk a mile to save on unnecessary costs.
Looking Forward
With this re-examination of who we are and what we now stand for, luxury will re-emerge as a moment in time and a memory to be cherished, personal to its owner, not an overpriced item that can be bought on credit.
Just last week someone was telling me they found their personal reaction to the global crisis far more understated than they thought possible. He said, ``What I find most puzzling is my lack of anger at losing so much money. I can only surmise that everyone around me is in exactly the same boat, so losing out doesn't quite feel as bad.''
It's exactly these powerful, collective emotions that will push forward-thinking South Korean businesses front of stage. The brands that understand the consumer desire to create a safer future (taking up a BRIC-country language course for example) will lead.
Consumer expenditure in the luxury sector will obviously still occur, but for the foreseeable future it will be carried out in a more reserved manner and only after a period of self-imposed abstinence. Bottles of champagne will be still be ordered, but instead of routinely and on cheaper brands, South Korean consumers will splash out on a more expensive bottle as a behavioral reward to switching to filtered tap water, after forgoing environmentally polluting bottled varieties.
Moving online, targeted digital services will prevail. As consumers switch from hitting stores out in the streets to shopping out of their armchairs in the home environment because the outside world is seen as increasingly threatening, the online malls that offer the social functions of social networking sites (SNS) will increase in popularity.
Opportunities for Korean Companies
Trust has weakened in the concept of globalization and people are naturally looking at home and to the immediate region for solutions. As we move away from the shaky foundations of what constituted the old model of globalization, South Korea is geographically well located to become a key player in the new era of regionalization. Local businesses that innovate fresh products and services that focus on originality and quality will become market leaders, both home and abroad.
Globally, countries wealthy enough to support substantial luxury purchasing are really suffering economically, and South Korea is no exception. But within adversity there is always opportunity. Rather than retreat in to shells, now more than ever is the time for local businesses to invest in research to become more competitive using current insights to comprehend how people feel.
I am not referring to R & D but in fact, qualitative and ethnographic consumer research to identify what people want and why. Local businesses need to invest in the kind of research that gets to the heart of what will motivate purchasing decisions in this new era, a time when the old models no longer apply. Unless local companies track these trends, this period to step front of stage in what is considered Asia's Century, will pass South Korea by.
Local companies need to invest in international research trips to understand what consumers and leading edge companies are doing regionally, especially in economies that have experienced boom and bust cycles in the past. Consequently, this will inspire and promote a culture of innovation internally. It is only through the discovery of new knowledge and by looking at global trends will local companies move from following consumer trends to anticipating them.
The real issue here is that research is considered a value added service by many South Korean businesses and not an area of expenditure. The attitude appears to be, why pay for research when ideas can be ripped off from overseas, even if the downside is they may not resonate locally with consumers.
There are just a handful of independent companies in Seoul that work in the area of market analysis and trend forecasting. In New York and London there are hundreds of consultancies looking at change, converting new ways of thinking into innovation.
South Korean businesses that copy rather than innovate will soon be overtaken by hungrier counterparts in India and China that are investing in cultures of innovation.
As people scale back on purchases and reconsider the meaning of luxury, local companies that fail to bring something new to the table will find consumers choosing to eat elsewhere, most likely from an original and more imaginative source.
 Who is Nicole Fall?
Nicole Fall co-founded Asian consumer intelligence agency Five by Fifty in 2007 and acts as Trend Director at this Tokyo headquartered trend forecasting and research company.
Born and raised in London, she moved to Asia in 1997. After stints in Hong Kong and mainland China, she settled in Tokyo more than a decade ago. Married with two bilingual young children, Fall launched her career in trend analysis as Asia Editor at online trend news service WGSN before working in the planning departments interpreting consumer behavior at leading advertising agencies in Japan.
Additionally, she contributes to a number of publications covering lifestyle and business trends in the region, and is also editor of the Luxe Tokyo guide.
Fall is a frequent guest to South Korea. During her last visit in October, she was invited to give a speech at Seoul Fashion Week on developing strategy to turn SFW into a leading fashion event within Asia.
Fall's next project is curating a trend space at the influential fashion fair Pret a Porter in Paris in January 2009, which is expected to receive 45,000 visitors. Five by Fifty was chosen to represent Tokyo, as the theme is New Generation Cities, and has 80 square meters to interpret Tokyo's complexity and showcase 2010 retail, style and consumer trends. For more information, visit www.fivebyfifty.com.
Additionally, Nicole co-founded Bespoke Tokyo (www.bespoketokyo.jp), a travel consultancy that has been credited with inventing the concept of personalized luxury tours conducted by guides, akin to having a friend show you around town. Billed ``Urban Safaris," this savvy service has been used by some of the world's most famous, rich and powerful people visiting Japan.
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김정은 軍에 선물도 父 답습…쌍안경·소총
