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The 2024 South Korean Fashion Market: Analysis of Growth Amid Economic Challenges

GOOVER DAILY REPORT September 1, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Economic Context and Market Overview
  3. Market Performance and Key Players
  4. Segment Analysis
  5. Challenges and Projections
  6. Conclusion

1. Summary

  • This report provides an in-depth analysis of the South Korean Fashion Market, projecting its worth in 2024 at 49.55 trillion won, a 2.3% increase from the previous year. It examines the impacts of the global recession, inflation, and declining consumer sentiment on key market segments: casual wear, sportswear, footwear, and bags. Despite economic adversities, particular segments like casual wear and sportswear exhibit resilience, continuing their growth trends into 2024. Additionally, the report highlights the performance of significant market players such as Samsung C&T Fashion Division and Nike Korea, which led the market in 2023 amid challenging conditions. The data-driven insights suggest ongoing but moderated growth, with casual wear maintaining its dominance.

2. Economic Context and Market Overview

  • 2-1. Impact of Global Recession on South Korean Fashion Market

  • According to the data collected, the South Korean fashion market experienced a significant downturn in the second half of 2023, primarily attributable to the global economic recession. After a period of recovery during the two previous years, fashion companies faced a decline in performance due to adverse economic conditions, including inflation and a decrease in consumer sentiment. Despite these challenges, the fashion market is expected to witness a 2.3% growth in 2024, resulting in a market size of approximately 49.55 trillion won, marking the continuity of a three-year growth trend still influenced by economic factors.

  • 2-2. Inflation and Consumer Sentiment

  • The influence of inflation on consumer sentiment has been pronounced, with documented declines in consumer spending. In particular, attitudes towards clothing expenditures have shifted negatively, as evidenced by the Consumer Spending Index (CSI) indicating a decrease to 96 points for apparel spending. The sustained pressures from high inflation rates have affected consumer confidence, leading to cautious spending behaviors in the fashion sector. Despite this, key market segments such as casual wear, sportswear, footwear, and bags have demonstrated resilience and are projected to maintain their growth trajectories in 2024.

3. Market Performance and Key Players

  • 3-1. 2023 Market Performance Recap

  • The South Korean fashion market faced significant challenges in 2023, experiencing a downturn due to the global recession, inflation, and a deterioration in consumer sentiment. Despite a recovery following the pandemic, companies witnessed a sharp decline in performance during the latter half of 2023. The market was recorded at 48.4 trillion won in 2023.

  • 3-2. Top Performing Companies in 2023

  • In 2023, four foreign companies and eight domestic companies were part of the '1 trillion won club' in the South Korean fashion industry. Samsung C&T Fashion Division and Nike Korea both achieved significant sales, reaching 2.051 trillion won and 2.0109 trillion won respectively, marking their entrance into the 2 trillion won club. The total sales of 12 companies in this club accounted for 39.2% of the total industry revenue, showing a slight increase of 0.3 percentage points compared to the previous year. Nike Korea recorded the highest growth rate among these companies at 20.1%, followed by Shinsegae International's domestic group with a 15.8% increase and Christian Dior Couture Korea with a 12.4% growth. Conversely, Shinsegae International Fashion Group, Louis Vuitton Korea, and LF Fashion Group reported declines of 12.7%, 2.4%, and 1.1% respectively.

  • 3-3. Factors Driving Growth in 2024

  • Looking ahead to 2024, the South Korean fashion market is projected to reach a size of 49.55 trillion won, marking a 2.3% increase from the previous year. The sectors anticipated to lead this growth include casual wear, sportswear, footwear, and bags. However, the ongoing decline in the domestic economy and high interest rates are expected to suppress growth in fashion consumption for the second consecutive year. Key growth trends are predicted for outdoor and street sports casual wear and workwear, with casual clothing driven by strong SPA brands and unique fashion identities. The sportswear sector is also expected to benefit from increased outdoor activities. The shoemaking market is projected to remain stable with a 1.4% growth rate, while the bags market, which saw high growth from luxury brands post-pandemic, will see a shift towards casual and travel bags, expected to grow by 3.1%.

4. Segment Analysis

  • 4-1. Casual Wear Market Growth

  • The casual wear market is projected to achieve significant growth, driven by the popularity of strong SPA (Specialty retailer of Private label Apparel) brands and fashion brands with unique identities. For the year 2024, the market size is expected to reach 20.5 trillion won, reflecting a 4.7% increase compared to the previous year. The casual wear segment is estimated to account for 40% of the total fashion market, having a market share of 42.4% in the first half and 40.5% in the second half of 2024.

  • 4-2. Sportswear Market Trends

  • The sportswear market is anticipated to continue its positive growth trend in 2024, following recovery trends after the pandemic. The market size is projected to reach approximately 6.97 trillion won, with a growth rate of 3.9%. The segment is particularly favored by the MZ generation (Millennials and Generation Z) who opt for athleisure, as well as older generations who participate in light sports. Specific categories such as golf and outdoor apparel show stability, maintaining robust demand.

  • 4-3. Footwear Market Performance

  • The footwear market is projected to stabilize with an anticipated size of around 7.5 trillion won for 2024, experiencing only a modest growth rate of 1.4%. While sneaker sales associated with athletic sportswear have driven market growth over the last three years, demand for formal shoes and boots continues to decline amid sustained economic challenges.

  • 4-4. Bag Market Outlook

  • The bag market is forecasted to maintain a growth trajectory, with an expected market size of approximately 3.69 trillion won for 2024, reflecting a 3.1% increase. After two years of rapid growth driven by overseas luxury brands, the market is now seeing strong demand for casual bags and travel bags. This shift is attributed to increasing outdoor activities and travel needs.

5. Challenges and Projections

  • 5-1. Economic Indicators Affecting Market Growth

  • The South Korean fashion market is projected to experience a growth of 2.3% in 2024, reaching a total market size of 49.55 trillion won. This marks the fourth consecutive year of positive growth despite economic challenges such as a global recession, rising prices, and a decline in consumer sentiment. The fashion market growth has been declining from the previous year's projection of 2.8%, indicating a two-year trend of decreasing growth rates. Exports have played a significant role in driving economic growth, but persistent underperformance in domestic consumption remains a concern. Economic growth was recorded at 1.3% in the first quarter of 2024. Additionally, indicators of external competitiveness showed slight improvement, yet the growth rate of private consumption continues to slow down, especially in the real estate sector. Consumer spending outlook has been negative, particularly for clothing, with an index score of 96 points, suggesting increased sensitivity of the fashion sector to economic fluctuations. Overall, the first half of 2024 is expected to rise by only 1.5%, significantly hampered by ongoing domestic market stagnation and high interest and inflation rates.

  • 5-2. Expected Challenges for the Fashion Market in 2024

  • Significant challenges are anticipated for the South Korean fashion market in 2024, influenced by ongoing global economic conditions. For the second half of the year, market analysts predict a 3.0% increase in sales, with total revenue expected to reach 27.70 trillion won, which reflects a strategy to capitalize on the Paris Olympics. Despite some anticipations of a rebound in the global economy and potential interest rate cuts, the market continues to grapple with consumer sentiment issues. The overall performance of the fashion sector will likely remain sensitive to macroeconomic factors as casual wear is projected to maintain its market dominance, capturing over 40% of the share and expected to achieve 20.50 trillion won in sales, up 4.7% from the previous year. Specific segments such as footwear and sportswear are also predicted to show growth; however, the general market remains vulnerable to external economic pressures.

6. Conclusion

  • The South Korean Fashion Market shows promising growth prospects for 2024, projected to rise by 2.3% to reach 49.55 trillion won, despite the pervasive economic challenges like global recession and inflation. The prominence of Casual Wear, driven by the popularity of SPA brands and unique fashion identities, underscores the market’s resilience. However, limitations such as high inflation rates and cautious consumer behavior temper growth expectations. Future projections indicate that key segments including casual wear, sportswear, and bags will continue to expand, supported by evolving consumer preferences towards comfort and functionality. The footwear market, albeit growing at a slower rate, remains steady. The market's overall stability heavily relies on continual monitoring of economic indicators and consumer trends to navigate ongoing uncertainties and enhance growth strategies.

7. Glossary

  • 7-1. South Korean Fashion Market [Market]

  • The South Korean fashion market includes various segments such as casual wear, sportswear, footwear, and bags. This market was valued at 48.4 trillion won in 2023 and is projected to grow to 49.55 trillion won in 2024, showing resilience amid global economic challenges.

  • 7-2. Casual Wear [Product Segment]

  • Casual wear is a leading segment in the South Korean fashion market, contributing significantly to overall growth. It includes products like casual outfits, street sports casuals, and workwear-inspired casuals, with a projected growth rate of 4.7% in 2024.

  • 7-3. Sportswear [Product Segment]

  • The sportswear market has shown a strong recovery post-pandemic, driven by increased outdoor activities and health-conscious consumer behavior. It is expected to grow by 3.9% in 2024, reaching a market size of 6.97 trillion won.

  • 7-4. Footwear [Product Segment]

  • The footwear market, though impacted by a declining demand for formal shoes, continues to grow due to the popularity of athletic sneakers. The segment is expected to maintain a 1.4% growth rate in 2024, reaching a market size of 7.50 trillion won.

  • 7-5. Bags [Product Segment]

  • The bag market, initially driven by high-end luxury brands, is now seeing growth in casual and travel bags due to increased outdoor activities and travel. It is expected to grow by 3.1% in 2024.

8. Source Documents