A view of luxury retailers on Apkujung-dong in Seoul, Korea, known locally as Rodeo Drive.
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Hyerang Choi, 29, isn't the type to show off ("I don't like logos, so I don't buy Prada") and prefers to mix and match—which, she says, isn't typical in Seoul. Today, she has done just that, pairing vamp burgundy Sergio Rossi knee-high boots with Topshop skinny jeans. Her treasure is slung over her shoulder: a Chanel "Sienna Miller" patent-leather bag that she picked up last year in London on the used market for what she considers a steal. "It was £1,300 [about $1,900]—I was lucky!" she beams. "It would have been more than double that in Korea." Her favorite brand is Chanel, but she refuses to overdo it. "You'll often see a girl wearing a Chanel coat, Chanel shoes, a Chanel bag—it's ridiculous!"
She says her mother, a designer before she married, tells her to save her money, and Choi's Canadian boyfriend "hates it" when she spends, say, $2,000 on a Chanel watch. But that doesn't keep her from planning her next purchase: a medium-size combi Rolex to the tune of about $4,000. "Many Korean girls like to have luxury brands. Even if they live in a box, they spend," she says. Copious spending is one of many things that unites Choi with Korean women of her generation. She is also educated (and about to return to London to study for an accounting degree), is candid about her opinions, lives at home while in Korea, is well traveled and relies on the Internet and her mobile phone for most everything she does—including shopping.
Samsung and LG can attest to the rampant connectivity in Korea, which has one of the highest levels of broadband penetration and 3G subscribers in Asia. Luxury-fashion shoppers often buy online at sites like Naver.com and Feelway.com as an alternative to what many, like Choi, think are overpriced luxury products in Korean stores. It's also a way to get coveted items from, say, Neiman Marcus, delivered directly to the home. Some estimate that 30% to 40% of branded products sold in Korea are bought online, not in official stores. Whether online or off, "Korea is a very, very sophisticated market," says Prada's Suhl. "Both young people and older people are traveling. They know brands, they buy brands because they really look into the brand value. It's not just a question of status. There are two different generations, and that can be a challenge. You have this split between very classic and trendy, avant-garde international—particularly among women." Suhl says Prada, with 20 stores in Korea, is up to the challenge.
Gucci Group CEO Robert Polet famously said that his business is not about selling handbags, but dreams. Sales of Gucci in Seoul suggest the Koreans are buying a lot of both—particularly dreams of luxurious materials like python and La Pelle Guccissima. "Bags are more popular [than clothes] because they're more visible. It has a lot to do with show—to show you can afford it," says Oh. Jin Seok Cho, 34, a.k.a. Stout, is a well-known appraiser of luxury items. In his experience, some women will spend 70% of their income on bags. "It's kind of shameful. Even if they're not wearing good clothes, a brand bag speaks leagues to others," he says. But the fake market exacerbates conspicuous consumption. "The premium image of Louis Vuitton is gone," says Cho. "There are a lot of fakes, and L.V. is kind of like public goods for everybody. The really rich would rather show off by buying Chanel and Hermés." Cho agrees there's an innate resilience in Korea, however. "If prices go up, the nature of the economy is that an individual would stop buying. But Koreans are thinking of ways to buy it. They don't think not to buy."
Sung-Joo Kim, chairwoman of Sungjoo Group and MCM Group, has launched brands like Gucci and Marks & Spencer in Korea. In her office, Kim has a model of the new MCM building slated to be built next to Coach in Apkujeong, which will give the $180 million brand a solid presence in Korea. "All major brands know Koreans are [some] of the biggest buyers. They're very aspirational in terms of brand names, and Korean ladies have good taste and appreciate good quality and design." Kim, a fashion professional for more than 20 years, says that the Korean consumer market is 70% dominated by women. And as women surpass men in the numbers of entrepreneurs and corporate leaders, Kim says they are proving to be smarter, less passive and more value-driven and ethically conscious about business. "They are confident and appreciate elegance and quality—not necessarily logo," she says.
Kim rejects the hubris of major luxury fashion brands as colonization: "They really try to penetrate, dominate and conquer the market. And it's about logo, logo, logo. It's almost like a temple that suggests, 'Come and worship us as a brand.' It's overwhelming, but what do they provide consumers?" Brands have to "wake up" to their shoppers' need for a brand with a message and a purpose, says Kim—or else it will cost them. "Asians keep quiet. And when they condemn a brand, they'll shut them out," she says. "People often say that we're the Latin blood in Asia."
Latin—or Italian? "Korea for us has always been the Italy of the Far East," says Luca Missoni, creative director for Missoni menswear collections and Missoni Sport, whose brand has been in Korea for decades. He says it's a "passionate country" where craftsmanship and content are foremost. Vogue's Krell agrees: "That's absolutely gospel. It is consistency that I'm drawn to there—the way they dress, present themselves and approach life." While they love Italian brands, Choi and Oh have a different take. "I've met Italians, and they're nothing like Koreans," says Oh. "I mean, dude, they're blond!" To be sure, Korea is a unique market. "Korea is this magic kingdom that people are quick to dismiss," says Krell. Luxury fashion brands, however, would be smart not to.