Why Trendsetting South Korea Remains a Gem for Luxury

Luxury fashion had a better-than-expected second quarter, with a cautious rebound taking shape. A standout region in the earnings reports? South Korea.

Hermès, which reported sales growth in most regions, including a 2% bump in Asia (excluding Japan), applauded South Korea for delivering “an outstanding performance”. Kering, whose return to growth prompted a rise in shares, said resilient sales figures from South Korea helped to counterbalance sluggish demand in China. Meanwhile, Asia helped to lift sales at Moncler, with China and South Korea leading growth in the region. Richemont and Burberry, too, highlighted South Korea for its Q2 contributions.

While LVMH did not make any specific acknowledgements to South Korea in its recent results, group chair Bernard Arnault’s strategic visit to the country last September is a testament to the market’s importance. Bloomberg has since reported that LVMH’s two largest fashion labels, Louis Vuitton and Christian Dior, are both looking to expand their flagships in Seoul within the next few years (with Dior’s revamp potentially featuring a permanent restaurant), while Tiffany & Co. — which currently only sells in South Korea via shop-in-shops — is expected to open in a standalone boutique in Seoul’s Cheongdam district in 2027.

Earlier this year, fashion label Ami Paris brought together a crew of high-profile guests — including actors Hwang In-youp of the hit series True Beauty, and Choi Woo-shik of the Oscar-winning film Parasite, K-pop stars Taeyong of NCT and Miyeon of (G)I-dle, and editors from regional titles such as Elle Korea — to celebrate its new boutique in the hilly, upscale district of Hannam-dong. The store may not have been Ami Paris’s first in the country, but it marked the brand’s largest globally. “South Korea has been a very important market for us since the beginning,” says Ami CEO Nicolas Santi-Weil, who attended the opening with designer Alexandre Mattiussi.

Hwang In-youp attends the Ami Paris store opening.

Ami Paris has been present in South Korea for about 13 years, sold through major department stores like Shinsegae and multi-brand concept stores like Beaker. The brand opened its first standalone boutique in the Garosu-gil area of Gangnam in 2022, but “footfall was declining”, Santi-Weil says. The brand decided to look north of the Han River instead, where many young locals spend their time and more luxury brands are refocusing their sights. The new flagship, in Hannam, “made a lot of sense”, says Santi-Weil. “The signals are green and we are very happy.”

Ami Paris opened a boutique in the Hannam-dong district.

In July, HSBC noted that South Korea’s booming technology sector (which has pushed average wealth per adult up 44% since 2020, according to UBS), surging consumer confidence and strong cultural capital has made the market a bright spot for the global luxury industry. “While directionally mature, Korea luxury spend has been strong in the last few months, with luxury retail sales running at above 20% growth on average in the last six months,” agrees JP Morgan’s head of European luxury and sporting goods Chiara Battistini.

Non-fashion companies are also betting on the market’s buoyancy: Richemont-owned watch brand Vacheron Constantin opened its first South Korean flagship last June, complete with a dedicated VIP lounge and events and exhibition space, while Prada Beauty opened its first standalone South Korean store in January that year. Meanwhile, carmaker BMW Korea will officially launch its ultra-luxury brand, Alpina, in the country in early 2027 and open seven dedicated showroom zones in the second half of the year, ahead of first customer deliveries in 2028.

Experts attribute the strength of South Korea’s luxury market to a number of factors, but most notably the AI-led semiconductor boom that prompted the country’s monthly exports to exceed $100 billion for the first time in June, putting the country on par with Germany, China and the US (the only three other nations to have crossed the $100 billion monthly threshold). The historic milestone has subsequently fueled rising stock markets, as well as revenues for South Korea’s largest listed companies, triggering mass employee payouts and contributing to higher luxury spending.

A notably positive boost in consumer sentiment has also helped to lift domestic consumption. The share of consumers in South Korea, who reported feeling optimistic about the economy, increased to 31% in the second quarter of 2026, up from 28% in the previous quarter, according to management consulting firm McKinsey & Co — a mood that coincides with greater political stability in the country and continued global interest in K-culture.

Rising inbound tourism supported by favorable exchange rates has also played a role, with South Korea emerging as a hotspot for foreign luxury shoppers, as a prolonged slide in the local currency made high-end products cheaper for overseas visitors. That has subsequently lifted sales at major department stores including Hyundai Department Store, Shinsegae Department Store and Lotte Department Store (all three expect their annual foreign sales to exceed KRW 1 trillion, or $702 million, for the first time this year). Department stores remain a primary sales channel in South Korea, accounting for about 40% of luxury sales, according to HSBC — a figure driven by both locals and tourists, the latter which account for 7-8% of department store sales but are growing 100% year-on-year.

The results of the latest quarter continue a trend from Q1, according to JP Morgan’s Battistini. “While Q1 luxury reporting was directionally mixed and highly polarized by category and brand, Korea stood out as particularly strong for all companies, driving an acceleration of the Asia-Pacific region for most,” she says. As “the ‘wealth effect’ generated by the strong equity markets in the first six months of the year has been an important driver of growth for luxury goods in Q2,” the outcome is “a tide that lifts most boats”, she notes. “The broad-based wealth effect and the attractiveness of price arbitrage for travelers should help the luxury sector across the board.”

While some shoppers in South Korea may be less cautious about spending, it doesn’t mean they are less selective, says Joon Kim, managing partner at HyperM, a Seoul-based marketing agency for global brands looking to expand in South Korea and other Asian markets. Local consumers, he says, are “much more deliberate about where they spend. But the appetite for fashion and luxury has not disappeared. If anything, spending has become more polarized.”

A “K-shaped” economy — where the top end grows and the lower end lags as inequalities widen — has meant that only some sectors thrive, and sharp rises in real estate and stock prices have increased asset gaps. As the post-pandemic spending boom fades and high inflation and interest rates persist, Kim says that South Korea’s consumers are value-conscious, often mixing accessible pieces with emerging Korean brands.

Local e-commerce platforms such as Musinsa and 29CM, alongside fashionable neighborhoods like Seongsu and Hamman, where many independent Korean labels have stores, have given shoppers “compelling alternatives to established global brands”, Kim says. Despite economizing on everyday purchases, local shoppers will still invest significantly in a watch, fine jewelry, or a piece with extraordinary craftsmanship or lasting value when they believe the price is justified, he adds.

Changing notions of personal milestones in South Korea is also contributing to the splurge, as young people celebrate life moments beyond just marriage and babies. “Among affluent professionals, a promotion, a career achievement or a personal success can now be an occasion to buy an important piece of jewelry for oneself,” adds Kim. “A luxury purchase is becoming a way to mark one’s progress. Shared on Instagram, the piece becomes part of a personal narrative — a symbol of achievement as much as taste.”

Chris Haeyoung Shin, a Seoul-based luxury brand strategist who previously held senior marketing roles at Fendi, Burberry and Dior Beauty, describes South Korea as “a market large enough to generate meaningful revenue, but concentrated enough for brands to create nationwide impact quickly.” She agrees that Korean consumers are not spending indiscriminately. “They are concentrating their spending in two areas: products with strong long-term value, and products that feel culturally relevant or emotionally exciting. The middle of the market is under the greatest pressure.”

South Korean singer and rapper Bibi attended the opening of the Burberry trench pop-up store opening in Yeouido, Seoul.

Shin adds that young South Korean shoppers are “more fluid than previous generations. They may wear an expensive watch or bag with a relatively affordable Korean fashion brand, sneakers or an outdoor jacket.”

The shift has been evident at Ami Paris, which has also been opening stores outside Seoul — most recently in Hyundai in Chungcheong, a province southwest of Korea. Accessories have been strong sellers in the country, as well as womenswear, according to Santi-Weil. He says that sneakers, bags and hats have all been growing faster in Asia than in Europe or the US, and that more than 60% of people who visit stores in South Korea are women — outpacing the brand’s global womenswear business, which stands at 20% of sales.

Furthermore, Korean shoppers have been losing interest in logos, Santi-Weil says. Previously, products with the “Ami de Cœur” emblem — a bold, red heart topped with the letter “A” in a capital sans-serif font — would fly off the shelves, he says. Now, customers are more interested in more considered pieces that help them build a complete, versatile wardrobe.