Market Overview - The luxury goods market in South Korea is experiencing significant growth, with sales from the three major department stores increasing by 7.2% and jewelry sales soaring by 12.5% in the first half of 2025 compared to the previous year [2] - The luxury fashion market is projected to reach $5.2 billion in 2024, with an expected compound annual growth rate of 2.74% from 2025 to 2035, potentially reaching $7 billion [4] - Young consumers aged 20 to 30 account for 31% of luxury goods sales, a 4 percentage point increase from the previous year [4] Consumer Behavior - The MZ generation (those born from the 1980s to the early 2000s) is driving the demand for entry-level luxury products, with a slight price increase of 2% to 3% overall [2] - Social media platforms like Instagram and TikTok play a crucial role in influencing purchasing decisions, with 58% of the MZ generation discovering new products through these channels [6] - The second-hand luxury market is also thriving, with an estimated size of $31.2 billion, and over 40% of transactions involving young consumers [6] Economic Context - Despite the booming luxury market, young South Koreans face significant economic challenges, including high unemployment rates and rising housing costs [12][14] - The average monthly income for young workers is around 2.8 million KRW, with a substantial portion of their income going towards rent, leaving little for discretionary spending [14][18] - The pressure to maintain a certain lifestyle leads to a tendency to prioritize luxury purchases over essential needs, with a low guilt rate of 4% regarding high-end spending [16] Debt and Financial Risks - Household debt in South Korea reached 1,952.8 trillion KRW in the second quarter of 2025, with individuals under 39 years old averaging over 110 million KRW in debt [20] - The delinquency rate stands at 3.2%, with young people experiencing the highest rates of overdue payments [20] - The increasing reliance on luxury goods as a means of social status and self-expression may lead to unsustainable financial practices among young consumers [22] Potential Solutions - The government is implementing measures to address youth unemployment, including job subsidies and increasing public rental housing [22][24] - Companies are encouraged to create more entry-level job opportunities and provide training programs to enhance long-term employment prospects for young people [22][24] - There is a need for a cultural shift towards more balanced consumption patterns, drawing lessons from other countries like China, which emphasizes rational spending and long-term planning [24]