What: South Korean luxury beauty sales surge by up to 24% while fashion growth slows to 5-11%, demonstrating a significant shift in consumer spending patterns during economic uncertainty.

Why it is important: This trend reflects a fundamental transformation in luxury retail, where beauty segments are becoming crucial revenue drivers for traditional fashion-focused retailers.

South Korea's luxury market is experiencing a notable transformation as consumers pivot towards high-end cosmetics amidst economic challenges. Department store giants Lotte, Shinsegae, and Hyundai have recorded remarkable growth in luxury beauty sales, ranging from 16% to 24%, while fashion segments show modest increases of 5% to 11%. This shift aligns with the classic "lipstick effect," where consumers favour smaller luxury indulgences during economic downturns. The trend has prompted strategic responses across the retail landscape, with e-commerce leader Coupang expanding its luxury beauty platform and traditional fashion houses like Louis Vuitton announcing their first cosmetics lines. Department stores are adapting by revamping their beauty counters and enhancing experiential retail offerings, while maintaining strong performance through their beauty segments despite overall market challenges. The phenomenon reflects broader changes in consumer behaviour and retail strategy, as the industry adapts to evolving market conditions.

IADS Notes: The surge in luxury beauty sales in South Korea mirrors broader industry transformations observed throughout 2024. In November 2024, major department stores implemented significant beauty counter renovations to enhance experiential retail offerings. This trend gained momentum as Louis Vuitton announced its strategic entry into cosmetics in March 2025, while Prada expanded its beauty footprint in the Korean market in August 2024. The shift towards beauty-focused luxury retail is further supported by February 2025 data showing young consumers increasingly favouring accessible luxury products over traditional high-end fashion items, suggesting a fundamental restructuring of luxury consumption patterns.

Luxury beauty sales in South Korea surge as high-end fashion faces economic slowdown