No End to Luxury Watch Boom in Korea

Koreans seem as addicted as ever to status symbols, bucking global market trends by snapping up luxury watches.

According to the Federation of the Swiss Watch Industry, its exports plunged 3.3 percent last year compared to 2014 to 21.8 billion Swiss francs.

Shipments to Hong Kong, the world's largest market, slumped 23 percent, and to the U.S. and China between one and five percent. Sales to Japan, the world's fifth-largest market, also fell 1.9 percent.

But exports to Korea surged a whopping 18.8 percent in 2014 and another 0.2 percent last year.

Lotte, Hyundai and Shinsegae department stores saw sales of luxury watches surge 20 to 30 percent last year and 30 to 40 percent in the first two months of this year on-year.

One factor is the rise in the number of Chinese tourists who go shopping here, but Korean customers still accounted for 80 to 90 percent of luxury watch sales.

◆ Test Market

Swiss watchmakers naturally keep a keen eye on Korea. Jaeger Le-Coultre, whose entry-level watches cost a cool W8-9 million, unveiled a W370 million watch in March and chose Hyundai Department Store as its first outlet (US$1=W1,147).

And more Swiss watchmakers are setting up shop in Korea.

Panerai opened a flagship store in Seoul last month and CEO Angelo Bonati visited Korea to attend the event. Breguet, which has not opened any new stores since 2010, opened one in February at Shinsegae Department Store in Gangnam.

Piaget and Audemars Piguet also opened new stores at Shinsegae in Gangnam, their first since 2014.

Yoo Tae-young at Hyundai Department Store said, "Luxury watchmakers used to consider Europe, the U.S., China and Japan their major markets, but private consumption in China is slowing and Beijing is cracking down on corruption. As a result, Korea is emerging as a major market in Asia".

◆ Ready Cash

And younger customers are increasingly keen. In 2012, 23.6 percent of luxury watch buyers at Hyundai Department Store were in their 20s and 30s, rising to 30.4 percent last year.

"Younger customers usually buy entry-level brands like Tag Heuer, which cost W3-5 million, or IWC, which cost W8-10 million", said Oh Myung-hoon at Lotte Department Store.

Jang Hye-jin at Shinsegae said, "The usual course of luxury brand consumption starts with high-end handbags, followed by clothes, watches and finally jewelry, and consumers in their 20s and 30s these days have few qualms about buying expensive products since they can save on other things".

Statistics show 90 percent of high-end watch buyers are men, but the number of female customers is rising as well.

One advantage is that luxury brand watches can be readily exchanged for cash.Kim Ji-youngat Complete K, a company specializing in high-end product marketing, said, "Watches and jewelry often rise in value over time, so they're popular in a recession".