Seoul-Seeking
It's 19°F in downtown Seoul as Eugine Oh picks up her BMW 528 from valet parking at the Galleria Luxury Hall. Oh—wearing Antonio Marras and Milly, along with Manolo Blahnik Mary Janes and Ray-Ban aviators—explains that when something arrives at Maison Martin Margiela, one of the boutiques at the upscale Cheongdam-dong department store, she can always expect a text message from the store manager. "It's helpful because if you're busy, you might not be paying attention, and you don't want to be behind," she says.
A trend researcher for South Korea's leading entertainment and media company, Oh, 28, likes the under-the-radar Maison Martin Margiela (named for the reclusive Belgian designer) because it has a story. "What's the point of having what others have? The Louis Vuitton Speedy bag was nicknamed the '3-second bag' because you can see it every 3 seconds," she says with a laugh, admitting that she, too, used to buy Louis Vuitton bags to show off. With a father who is an importer-exporter in the garment industry, which made her privy to foreign brands at least two years before they came to Korea, and having attended high school and college in the U.S., Oh used to feel light-years ahead of Seoul fashion and its followers. "Not anymore. You can buy anything here," she says. "Seoul is so wired. And girls in Korea are quick. They study the trends and sources of information available to them." (Read about the most innovative women in the global fashion industry.)
Korea has come a long way since the 1970s, when ruler-bearing policemen stopped women on the street to measure the length of their skirts. Outside the Galleria, Cheongdam's main drag is lined in luxury as block after block exalts the flagship and stand-alone stores of the titans of fashion: Gucci, Louis Vuitton, Hugo Boss, Dolce & Gabbana and Jil Sander. A few "Coming Soon" signs for brands such as TSE and MCM wrap around construction sites like monogrammed presents waiting to be opened by eager shoppers. This is Seoul's Champs-Elysées, a concrete-and-glass table of contents for the global fashion brands that also fill Seoul's department stores, such as Lotte, Hyundai and Shinsegae, Korea's oldest. Retail rents in the Cheong-dam and Apkujeong neighborhoods—the priciest in Korea—have quadrupled over the past 10 years. As on Rodeo Drive or Fifth Avenue, if a store hasn't arrived here, it hasn't arrived in the eyes of the brand-conscious Korean consumer.
Just 12 years after opening as a liberalized market, Korea—Asia's fourth largest economy—is now a boomtown for international brands taking advantage of double-digit growth in the luxury sector, even amid Korea's severe economic downturn. This winter, Prada Asia Pacific launched Miu Miu here. And this month, Prada begins the Transformer project at Seoul's Gyeonghui Palace. Designed by architect Rem Koolhaas, the tetrahedron-shaped building will physically transform throughout the summer, rotating in cadence with different monthly cultural programs related to art, film and fashion. Sebastian Suhl, CEO of Prada Asia Pacific, says the launch is a testament to the importance of the Korean market. "Asia over the last years has shown explosive growth," he says. "Korea has high double-digit growth and the market is extremely resilient."
And resilience is looking pretty good to the luxury goods sector about now, as the region's economies suffer in the global decline. Korea's estimated economic growth for 2009 could fall below 2%, compared with last year's 5%. Central Seoul and its luxury brands, however, seem unfazed. While the pace of some businesses might be slowing to that of treacle on a winter's day, foreign fashion brands have been seeing growth between 20% and 30%. And the plummeting won is making Korea very attractive to Japanese consumers. At Van Cleef & Arpels in the Galleria Luxury Hall, 80% of the sales this past October and November were made by Japanese shoppers—a 228% increase in purchases by Japanese consumers over the previous year. Associates at Louis Vuitton in Apkujeong say that while sales have been steady, locals aren't the ones buying. Meanwhile, according to South Korea's National Statistics office, Internet sales of luxury fashion brands in Korea hit a record high of $15.7 billion last year, up 18% from the previous year.
But Seoul isn't Tokyo or Hong Kong. And as the Korean luxury market rapidly matures, women like Oh want more from their brands. Gene Krell, fashion director for Vogue Nippon, says when he first went to Seoul 14 years ago, the influence of foreign fashion was nil. "The notion of the fashion business was so abstract, they wouldn't have known Balzac from Balenciaga," he quips.
Krell, who subsequently launched seven Condé Nast magazines there (including Vogue Korea), says modern Seoul has come a long way since the days when he couldn't buy a bottle of olive oil. But as the city has changed and consumers have become more sophisticated, their fundamental desire for quality craftsmanship—and women's preoccupation with beauty, perfection and glamour—appears to feed growth in the fashion market. "Korean people have tremendous respect [for] and loyalty to their brands. It's an amazing tenacity. Fashion is a vessel and a visual outcome of all of that," says Krell, who notes that Korean consumers know how to integrate clothes. "It's not a case of how clothes should be worn, but how clothes can be worn."
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.