19 Dec, 2024

Why Pre-Loved Luxury Products Are the New Black for Young Korean Shoppers

======

Singapore/Seoul, South Korea – 16 December 2024 – In a country renowned for its lavish consumption of luxury goods, South Korea is experiencing a profound shift in its shopping habits. Driven by economic pressures and a growing focus on sustainability, South Koreans are rethinking luxury and second-hand is winning, according to a 7 November 2024 report by global strategic insights practice Canvas8.

The report by Canvas8, a global strategic insights practise, was authored by Nicole Cord-Cruz and features expert comment from Irina Korgun, an expert in Korean economy and trade policy, Shinae Lee, the head of communications at Bungaejangter, a leading Korean C2C second-hand marketplace platform, and Seah Joo, Head of Sales and Business Development at Madeleine Memory Inc., Korea’s first RaaS (Resale-as-a-Service) startup.

The report finds that, rather than splurging on brand-new designer items, an increasing number of South Koreans are turning to the thriving second hand market for luxury finds. This trend, particularly popular among younger generations, reflects a deep change in consumer values: status, savings, and eco-consciousness are now the new currency. As the resale market continues to expand, industry players are adapting to cater to a new, more thoughtful generation of shoppers.

The rise of second hand luxury is evident in South Korea’s resale market, which has ballooned from ₩4 trillion ($2.9 billion) in 2008 to an estimated ₩43 trillion ($31.2 billion) by 2025. With major platforms such as Karrot, Bunjang, and Joonggonara seeing millions of active users, South Korea has emerged as the world’s leading market for second hand goods, surpassing other major economies in both volume and cultural significance.

Economic Factors and Shifting Consumer Attitudes

The rise in second hand luxury is not solely a byproduct of changing consumer tastes; it also reflects broader economic trends. South Korea’s economy has slowed, with many consumers tightening their belts in response to financial uncertainties. As Dr. Irina Korgun, PhD., professor at Hankuk University of Foreign Studies, explains, “While GDP growth remains strong at around 2.5–2.7%, it’s mostly driven by the export sector… The unfavourable economic situation makes many people reconsider their consumption patterns with regard to luxury.” For many, the idea of spending on new luxury goods feels increasingly out of reach. As a result, pre-owned items, often at a fraction of the retail price, are now seen as a viable and sensible alternative.

In addition to economic factors, younger South Koreans—Gen MZ (millennials and Gen Z)—are driving this shift in mindset. Instead of viewing luxury purchases as a sign of eternal ownership, they are embracing the concept of “experience-first” luxury, where items are enjoyed and resold, helping to make high-end fashion more accessible. According to Bunjang’s CEO, Jaewha Choi, “These generations ‘experience’ luxury goods and quickly resell them rather than patiently save to buy new products and ‘own’ them forever.” This preference for accessibility and sustainability is reshaping the market and challenging traditional notions of luxury consumption.

Sustainability and the Appeal of the Hunt

But it’s not just economic considerations driving this change. There is a strong undercurrent of environmental consciousness that is giving second hand luxury its newfound appeal. Sustainability, along with the thrill of the hunt, plays a pivotal role in shaping consumer behaviour. Seah Joo, director of business development at Madeleine Memory Inc., the company behind Relay, a branded resale platform, elaborates: “Consumers enjoy the hunt to find second hand [products]. It shows the diversification of preferences in Korean consumers as well as the sentiment that puts self-satisfaction over attention.” For many, the hunt for the perfect second hand luxury item is just as satisfying as buying new.

Moreover, South Korea’s second hand market is increasingly becoming a lucrative business for savvy resellers. The market is expanding beyond simple savings, with some turning resale into an investment strategy. As Joo notes, “Brands [allow] customers to participate in the process of [making] existing products [new] by extending their usage to different customers – [also] supporting the ethos of valuing quality over quantity.”

Growing Security Concerns and Platform Solutions

Despite the enthusiasm for second hand shopping, there are concerns about the security of online transactions, especially as fraud cases increase. In 2023, over 1.34 million counterfeit products were imported into South Korea, with bags, shoes, and electronics being the most popular targets. The surge in fraud cases has led platforms like Bunjang to enhance security features. Shinae Lee, head of communications at Bunjang, emphasizes, “We’ve been eliminating buyer risk, solving pain points throughout the whole e-commerce journey on our platform, and educating our consumers, to change people’s perception that second hand shopping is risky.”

Bunjang, for example, has implemented a secure escrow system, which holds the buyer’s payment until they confirm receipt of their purchase. This extra layer of protection has significantly reduced disputes and fraud, offering a safer environment for both buyers and sellers. However, these security measures come at a cost—sellers are charged a 3.5% fee—but for many, it’s a small price to pay for the peace of mind that accompanies a safe transaction.

The Future of Luxury in South Korea

With a growing sense of environmental responsibility and the increasing appeal of affordable luxury, the second hand market in South Korea is poised for continued growth. As Korgun points out, “Social media helped to overcome the negative image, promoting them as vintage goods.” Platforms like Instagram and TikTok have been instrumental in reshaping the perception of second hand items, turning them into coveted vintage treasures rather than signs of financial struggle.

Looking ahead, brands are starting to recognize the power of the second hand luxury market. Large department stores, including Lotte, Shinsegae, and Hyundai, have introduced dedicated spaces for pre-owned luxury goods, catering to a younger audience that values both exclusivity and sustainability. For these stores, attracting Gen MZ shoppers is critical, given their future purchasing power.

Nick Morris, UK-based founder and Managing Director of Canvas8, said, “As the second hand luxury market evolves, it’s clear that South Koreans are no longer just looking for high-end goods—they are redefining what it means to shop for luxury, with an eye on both sustainability and security. With a growing market, rising consumer education, and innovative platform solutions, pre-loved luxury is here to stay in South Korea.”

The report may be downloaded here (registration required): https://www.canvas8.com/library/reports/2024/11/07/south-koreans-are-rethinking-luxury-and-secondhand-is-winning