What: Korean luxury market faces severe contraction as credit card transactions for major brands plummet, with Kering sales dropping 10.3% and LVMH declining 4.2% year-over-year in February.

Why it is important: This downturn in Korea, a key trendsetting market, signals a broader shift in Asian luxury consumption patterns, reflecting growing price sensitivity even among traditionally resilient consumers.

The Korean luxury market is experiencing a significant downturn, with credit card transactions for Kering brands reaching their lowest monthly sales figures since 2018. February data shows Kering's total sales dropped to USD 26 million, marking a 10.3% decline from the previous year. This downturn has affected major labels across the spectrum, including Gucci, Balenciaga, and Bottega Veneta. LVMH brands, including Louis Vuitton and Givenchy, also faced challenges with a 4.2% decrease in transactions to USD 99.3 million. Other prestigious houses weren't spared, with Dior, Burberry, and Chanel experiencing significant declines of 24.8%, 22.4%, and 8.4% respectively. The slowdown reflects broader economic pressures affecting Korean consumers, particularly the middle class, who are increasingly cutting back on discretionary purchases despite their historical willingness to invest in luxury items even during price increases.

IADS Notes: The Korean luxury market's decline aligns with significant shifts observed throughout the past year. In February 2025, young consumers began moving away from luxury brands towards more affordable alternatives, while March 2025 data revealed a pivot to luxury beauty items as fashion growth slowed. This transformation has particularly impacted major luxury groups, as shown by Kering's 12% revenue decline in Q4 2024. The industry has responded by introducing more accessible price points, while Korean middle-class spending continues to remain below pre-pandemic levels, fundamentally reshaping the luxury retail landscape.

Koreans’ interest in luxury goods on the wane