Koreans buy luxury at duty-free shops
Trend attributable to middle class’ strong purchase of expensive goods
By Cathy Rose A. Garcia
Staff reporter
When it comes to shopping for Louis Vuitton, Chanel and Gucci, many Koreans are not flocking to the posh flagship stores in Cheongdam-dong. Instead, they head to Lotte and Shilla Duty-Free shops or purchase at Incheon International Airport.
``In Korea, many consumers buy at the duty-free shops... Other Asians also buy at duty-free shops, but not with the same passion as Koreans. They want to save money, which is a Korean trait,'' Radha Chadha, a leading marketing and consumer insights expert, told The Korea Times in a phone interview.
Prices at the duty-free shops are around 10 to 20 percent cheaper than in the shops in Seoul. The discount might not seem a lot at first, but when you're buying a 3 million won ($2,600) handbag, it adds up to significant savings, especially for the middle-class and upwardly mobile young professionals.
It's no wonder why the duty-free shops around Seoul are always crowded not just with Japanese or Chinese tourists, but also outbound Korean travelers who shop before going on a trip. Most of the well-known brands can be found at duty-free, such as Louis Vuitton, Chanel, Gucci, Marc Jacobs, Fendi, Prada, Hermes, Tiffany and Co. and Burberry.
Chadha co-authored the book ``The Cult of the Luxury Brand: Inside Asia's Love Affair with Luxury'' with Paul Husband in 2006. In the book, a chapter is devoted to Koreans' obsession with luxury goods. Luxury brands, she said, have become ``everyday necessities'' in Korea.
Chadha cited three uniquely Korean forces have contributed to its culture of luxury: a national obsession with beauty, easy credit, and the highly competitive nature of society.
``Korea is a growth story (for luxury). It's strong. The Korean consumers' love for luxury is still very ardent. It has to do with the whole focus on beauty and obsession with presenting yourself well. It is on the high side but it translates to sales for the high-end luxury goods companies,'' she said.
Chadha noted Korea is a good case study for just how fast the ``cult of the luxury brand'' can take root in an Asian country. For example, there is a link between beauty and luxury ― as the desire to look good increases, consumers will go from buying cosmetics and skincare products to designer bags and clothes.
In the book, Korea is also seen as an example where Western luxury brands have edged out local designers. These international luxury brands are considered ``aspirational, cool and status enhancing.''
The book was written in 2006, but Chadha said some parts are still relevant although the Asian luxury market has moved on. Obviously, the global economic crisis has affected Asia, but not to the same degree as Europe and North America.
Currently China has emerged as the biggest market for luxury retailers, while Japan is on the decline. ``(China) was significant then and it is now the biggest market. The Chinese consumer is the biggest consumer for luxury brands... While Japan is still a big market, it is declining. There has been a shift in broad consumer behavior, and there are questions on the long-term prospects for luxury there,'' she said.
Korea has also remained a steady market for luxury goods, despite the economic downturn. ``The demand for luxury in Korea is linked to how the economy is doing. The Korean economy has done well. There's also a lot of interest from Japanese tourists since the prices of luxury goods are attractive,'' Chadha said.
As for the future of luxury, Chadha sees Asia as the growth driver for global luxury goods companies.
``Asia is now the focus of luxury companies. It's now the growing market. Everything is on the up again. With the recovery, people are now more optimistic. Asia will lead the growth story for luxury,'' she said.