Consumer characteristics in South Korea
The majority of Korean people are in the age group with high consumption needs (15 to 64 years old), accounting for 71.5% of this country's population (Statista.com, 2021). The Korean population is concentrated in Seoul and provinces around Seoul such as Incheon, Gyeonggi or cities located in the delta such as Busan, Daegu, Daejeon and Gwangju.
With GDP per capita in 2022 reaching approximately 33,719 USD/person, Korean people generally have a relatively high affordability for consumer goods. However, the wealth gap in South Korea is significant, so there are also considerable differences in people's demand for commodity consumption. Consumer goods in South Korea are very diverse, from essential goods (such as food, clothings, footwear, etc.) to luxury products (such as jewelry, technology, vehicles of all kinds, etc.)
Main consumer products
According to OECDStat, Korean consumers spend up to 17.3% of their total spending on housing, electricity, water, gas and other fuels, and 12% on food and non-alcoholic beverages, 10.8% on transportation, 10.4% for restaurants and hotels, etc. Thus, the majority of Korean consumers' spending is on essential products, serving their basic needs of food, accommodation and transportation.
Table - Common consumer goods and services in Korea in 2022
|
Consumer goods/services |
Percentage in total expenditure of consumers |
|
Housing, water and electricity, natural gas, and other fuels |
17.3% |
|
Food and non-alcoholic beverages |
12% |
|
Transportation |
10.8% |
|
Restaurants and hotels |
10.6% |
|
Culture and leisure |
7.8% |
|
Health |
5.9% |
|
Clothing and footwears |
5.3% |
|
Education |
5.2% |
|
Communication |
5.1% |
|
Furnishings, household equipment and everyday maintenance of the house |
3.1% |
|
Alcoholic beverages, tobacco and narcotics |
1.7% |
|
Other goods and services |
15.2% |
Source: OECDStat, 2023
Consumption trends in South Korea
Most Korean consumers have high requirements for standards and quality of goods. These standards are reinforced by a series of nationwide consumer protection regulations. Importers and retailers also hold this view and will not accept products that do not meet their quality standards.
In South Korea, shopping is not only for basic needs but also for image and social status, so Koreans place great emphasis on brands. Social media are used as means for consumers to find information and evaluate products before making purchasing decisions. Especially, influencers and testers have a great influence on Korean consumers' purchasing decisions. In addition, Koreans are also willing to support brands and buy products that celebrities promote or use, thereby often creating short-term consumption trends for a certain product.
Korean consumers are relatively open to imported goods as long as the goods meet their requirements of the quality, image, and brand standards. This also leads to the fact that consumers are increasingly less attracted to domestic products while purchasing foreign products is increasing.
Consumption trends in South Korea have also changed dramatically. If in the past, Korean people tended to consume in large households (3 or more people), then in recent years, the trend of single-person households is dominating. According to a report by the Korean Bureau of Statistics in 2022, the marriage rate - the number of marriages per 1,000 people in this country slid to 3.7, a record low number since South Korea started making statistics. Also in that report, this trend is predicted to continue for many years to come. Therefore, this situation will greatly affect the purchasing power and consumption trends of Korean people in the near future.
E-commerce is growing in South Korea, partly due to the increasing number of people using smartphones and the internet (more than 85% of the Korean population owns smartphones, and 98% of Korean households access the Internet daily), and the convenience and speed of this form of shopping. In fact, about 90% of this country's population uses e-commerce platforms and this number is expected to increase to 94.4% in 2023 (Data Reportal, 2022).
Environmental-friendly consumption has not been fully popularized in South Korea, but this trend recently is developing as organic and natural "green label" products are becoming more and more popular.
Source: Center for WTO and International Trade
