K-pop culture, the influencer economy and duty-free shopping emerged as key trends at the 2016 edition of the Condé Nast International Luxury Conference, Seoul.
The second edition of the Condé Nast International Luxury Conference, which took place in Seoul in April 2016, focused on South Korea as one of Asia’s most important luxury markets. The packed two-day agenda set out to explore some of the luxury industry’s key topics, including K-pop culture, the influencer economy on social media, and Chinese tourists’ current obsession with duty-free shopping.
Condé Nast’s Suzy Menkes, international Vogue editor, again hosted the forum, which was held at the Shilla hotel and the Dongdaemun Design Plaza in Seoul. Luxury fashion experts who attended included Olivier Rousteing, Balmain’s creative director, Sung-Joo Kim, chief visionary officer at MCM, and Eva Chen, head of fashion partnerships at Instagram.
Seoul was chosen due to the conference’s focus on the thriving K-pop youth culture, also known as the Korean Wave. ‘The era of Asian renaissance where Asian culture begins to influence global popular culture is becoming much more prominent and Korea is at the heart of it. MCM is a living testament of Korean and Asian influence in the global market led by Millennials who are borderless and without boundaries,’ said MCM’s Sung-Joo Kim.
Seoul: a duty-free hotspot for Chinese tourists
Korea has emerged as a top destination for duty-free retail, a market valued at $88 billion that attracts millions of globe shoppers every year. ‘Korea is the largest duty-free market, and duty-free retail is taking off with a vengeance,’ observed Aimee Kim, partner at McKinsey, on the opening day of the conference.
This rise in popularity is fuelled by the growth of Chinese outbound tourist numbers and the frequency of their trips. Most Chinese travellers are looking for cheaper products and a wider selection, with K-beauty being ‘the predominant product category benefiting from the surge in duty-free retail,’ according to Kim.
However, as Chinese luxury consumers become increasingly sophisticated and venture beyond the duty-free store when visiting Asia, due to a more crowded retail scene, especially in Seoul, ‘duty-free retailers need to invest more and up their game if they want to attract the discerning luxury customer,’ Kim warned. She added that Chinese consumers visit Seoul to purchase the products that South Koreans are buying; and that duty-free retailers must thus ensure effective branding, competitive pricing, marketing, merchandising and a compelling in-store experience.
She also noted that Chinese travellers are choosing their destinations not just for shopping opportunities, but for the overall trip experience, and recommended that duty-free store locations should be accessible and central for tourists, visa policies should be eased, exchange rates should be monitored and the rising demand for passports among Chinese Millennials should be leveraged.
Chinese Millennials: the power of Asian youth
Chinese Millennials are driving a paradigm shift in Chinese consumer behaviour across generations. Keynote speakers at the conference, who included Vogue China editor-in-chief Angelica Cheung, Wim Pijbes, general director of the Rijksmuseum in Amsterdam, and Erwan Rambourg, global head of consumer and retail research for HSBC, all agreed that luxury brands cannot ignore this shift in consumer mindset, and emphasised the importance of understanding the emerging Millennial market.
As Cheung pointed out, this generation is heavily influenced by social media. ‘To communicate with the new Millennials, authority is not enough,’ she said. ‘We need to be their friend and to understand who they are influenced by.’
This relates directly to the fact that Chinese Millennials are looking for authenticity and real experience, which can be harnessed by using what Wim Pijbes of the Rijksmuseum described as an ‘open house model’ – visitors are free to take photographs of everything they see at the museum, bridging the gap between traditional and modern means of consumption.
Chinese consumers are the largest demographic of luxury consumers and are identified as ‘diverse, younger than their European and American peers, and predominantly female,’ said HSBC’s Rambourg. Consequently, it is vital for luxury brands and retailers to understand how they communicate, to target them efficiently.
The power of social media platforms
Balmain’s creative director Olivier Rousteing and Instagram’s head of fashion partnerships Eva Chen together reflected on the revolution spearheaded by social media and how this digital world is integral to the Millennial generation.
Both agreed that this digitally progressive world we live in is a time of enormous opportunity. Social media platforms such as Instagram allow luxury brands to connect with customers through storytelling. ‘So many luxury brands use the word “storytelling” and what else is Instagram than storytelling? There’s so many ways to do it now through Instagram,’ said Chen. This democratic approach coincides with the way the luxury fashion industry has started selling high-end garments on a see-now-buy-now basis, enabled by the instantaneous nature of catwalk coverage across multiple social media platforms. Social media also allows customers to buy into a brand directly and discover how its designers work. ‘You can reach so many people through Instagram,’ said Rousteing. ‘Now, after a show I can invite people to understand the Balmain world. If they want the Balmain world they can have it and follow; if they don’t like it, they can unfollow.’
Millions of young Asians aspire to luxury brands, and Chen believes Instagram can be used to spark excitement about what is about to land on the shop floor. Ultimately, she concluded, platforms such as Instagram are ‘truly a community – and can be a great ice-breaker.’
Plastic surgery: the new luxury experience
Plastic surgery clinics are thriving in the Gangnam luxury shopping area of Seoul, in close proximity to Hermès and Dior. Suzy Menkes toured the ID Hospital ahead of the conference and reported that cosmetic surgery has become ‘just another commodity […] a luxury product that can be marketed like conventional high-end retail.’
Dr Sang Hoon Park, founder and director of the ID Hospital, says he sees such high-end retail as direct competitors: that a customer might choose a holiday, a designer handbag – or surgery: ‘That’s the competition and why we can say this is luxury beauty.’
The combination of shopping and surgery appeals to the surging numbers of Chinese tourists arriving in Seoul. The ID Hospital has been designed as ‘Asian’ rather than specifically ‘Korean’, explains Park, as, while half of its customers are local, 50% are from China, Malaysia and Japan. This new luxury beauty trend must be leveraged by duty-free retailers, who find themselves in a fortuitous position. As Menkes noted, it is common to see ‘Asian women with bandaged faces shopping unselfconsciously in Seoul’s vast duty-free stores.’
Global Blue takeouts:
• Seoul is now a favourite duty-free hotspot for Chinese tourists, especially those seeking beauty products.
• Chinese Millennials must be targeted effectively by luxury brands through social media platforms such as Instagram, to create a sense of community and establish an authentic relationship through storytelling.
• Plastic surgery is the latest luxury beauty experience for Chinese travellers and must be leveraged by duty-free retailers, especially in the Gangnam luxury shopping area in Seoul.