New opportunities for Luxury …in South Korea!

In July Contactlab, in collaboration with Exane BNP Paribas, has launched a report offering an in-depth view on luxury market in Asia, but going beyond China: Luxury in …South Korea (view full report here).

Korea has been defined one of the most wired countries on the planet (source: Ekosglobal, 2014):

• Internet penetration nearly 90% of the population
• Mobile penetration 106%, 4th country in the World
• Highest social media penetration rate in East Asia (74%)

Luxury market in Korea is already very sizable and has good growth opportunities. This market represents now c.a. 4.5% of worldwide Luxury Goods market and it’s at third place in Asia, after Japan and China (source: Altagamma-Bain Oct, 2015/Accenture).
Korean luxury clients yearly spending appears in line with worldwide average both for in-store and ecommerce Channels. Although 2015 registered a significant increase, ecommerce penetration for luxury monobrands in Korea is below worldwide average: 26 of the 30 monobrands in panel have a Korean website but only 12 with ecommerce.

Report results come from physical and digital analyses that were carried out focusing on 30 main luxury monbrands and 6 International e-tailers. The two axes generally used to create the Digital Competitive Map (view report here) were adapted to the local context: 10 parameters have created the Strategic Reach in Korea Axis, 64 parameters used for the Digital Experience for Korean Customers Axis.
Digital Competitive Map in Korea overall shows low criteria exploitation: just 38% of its maximum potential (vs 55% in US).
Burberry and Gucci overall leading the Map: Gucci strong leader across all criteria in the Strategic Reach axis, while Burberry in the Digital Customer Experience axis, in particular for Personal and Cross-Channel Services.
Cross-channel opportunities appear under exploited:

• only Burberry offers Collect / Product Exchange in Store, and Gucci In-store Availability and Product Exchange in Store
• only 1/5 of the brands in panel offer Book an Appointment and Make to Order services online
• Cartier and Valentino leading in the Store Finder tool on web, followed by Tiffany and Zegna, only four brands personalize with specific “Boutique Photo”

Korea has a very extensive and pervasive physical store presence: 676 Monobrand physical stores in 104 locations in 13 Cities, ca. 60% of stores located in Seoul. All Brands in the Panel have physical stores in Korea.



Korean retail chains Lotte, Hyundai and Shinsegae play a vital role in Korean luxury landscape both online and offline:

• selling online all the brands in panel. Only Gucci, Burberry and Ferragamo have also an official online store on the major luxury Department Stores chains websites
• controlling a high number of department stores, shopping malls, Duty Free Stores in cities and airports and major outlets. Duty Free Stores inside cities (customers purchase products at downtown location and collect packages at the airport before departure) represent a Korean peculiarity and account for ca. 15% of total Korean Monobrand stores in the Panel.

When talking about Asian market there’s no just Japan and China: South Korea is a dynamic economy and digital luxury market is still under exploited compared to the physical development. Korea may soon play a key role in luxury market and deserves to be kept in analysis.
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