This October, RetailDetail takes a small selection of CEO’s to discover the trendy country that is South Korea. Every year, Seoul University distils ten trends from local consumers, which are often very recognisable. What can we learn from the country of K-pop?
1. Shared consumption
South Koreans are increasingly willing to pay only for what they use. Group purchases or flexible subscriptions and contracts are very popular, but if that is not possible, Koreans just make it happen by themselves. A striking phenomenon is “slicing up” purchases: consumers use online platforms to buy larger packages from hypermarkets or wholesalers and then share them with others. This can range from bulk purchases of vegetables to even ordering food together to cut delivery costs.
This is the result of the increasing proportion of single-person households, the university says. Companies can respond to this new situation by offering smaller packages and flexible, short-term subscriptions themselves.
2. Get rid of stereotypes
The legacy of all Covid-19 restrictions and contactless consumption has led to a more fragmented consumer base and more deviation from what used to be the “default preferences”. Typical customer profiling and segmentation has become less relevant, resulting in a more polarised market. The younger generation in particular does not follow the traditional consumer path.
It therefore becomes even more important for brands and retailers to demonstrate how they stand out from the crowd. Understanding consumers, in turn, requires not being blinded by averages – rather, companies have to analyse the whole market.
3. New work standards
In Korea, just as in so many other countries, large numbers of workers quit after the pandemic. Companies now have to do all they can to keep their talent on board, and they are doing so by offering flexible working environments and focusing more on extralegal benefits. At the same time, young people expect regular feedback and transparent processes.
Others opt to not return to the workplace altogether: the number of platform workers and ‘superfreelancers’ is clearly increasing. They often combine three to four freelance jobs, working more than they would with a full-time contract. Meanwhile, the ‘gig economy’ is expanding from delivery and logistics to marketing, design, development and even architecture.
4. Measured relationships
Younger consumers prefer relationships with a clear purpose and a flexible ‘membership’. It does not matter whether the relationship is online or offline, because the line between spending time together physically or virtually is blurring anyway. Some even regard hanging out virtually to be even more intimate.
They love making random connections through digital platforms such as Airdrop play, Omegle and the TikTok. Live interactions and shared experiences take centre stage. Companies see these platforms as the place to motivate consumers to spend time with their brand and review their products online.
5. Serious gaming
Koreans take their hobbies very seriously, and gaming most of all. Online gaming platform Roblox, for instance, established itself in the country in 2022 and is experiencing meteoric growth. There are multiple motivations for gaming and Seoul University therefore distinguishes different types of gamers:
Concept-oriented gamers are looking for immersive experiences. They develop virtual personalities (with digital as well as offline transactions) as a way to escape the strict daily expectations and pressure to conform.
Relationship-oriented gamers are looking for experiences they can share with other people, preferably through metaverse platforms such as Roblox.
Collectors mainly want to collect and trade digital or physical goodies, such as NFTs, anime characters and digitally curated experiences.
6. Generation Alpha
Generation Alpha is the generation of digital natives born in or after 2010. By Korean standards, this new generation of consumers is extremely individualistic, with high self-esteem. Instead of pursuing a traditional sense of success, they prefer to become influencers later on. While sharing time with others online via live chats is natural for them, they actually crave more offline connections.
Due to Korea’s low birth rate, they generally have access to three wallets: their parents’ wallet, their grandparents’ wallet and their own. To reach them, brands need to let young people be the architect of their own experience and let them co-design or personalise products or services, for example.
7. Proactive technology
Near the southeastern city of Busan, a unique smart city is built from scratch. On an area of 2.77 square kilometres, an entirely new urban development project for a population of up to 100,000 people will emerge. The intention is that cars will drive there autonomously, while robots will take care of everything from meal delivery and waste recycling to individualised healthcare.
The importance of data (from collection over storage to use) cannot be overstated: companies are patenting their own algorithms and data tools, especially for smart cities and to increase the energy efficiency of products. Smart sensors are also increasingly being used in the country. Consequently, companies using proactive technology to improve customers’ experiences, well-being and safety are very welcome there.
8. Physical space rediscovered
The increasing focus on metaverses ironically means that physical space is also becoming more important again. Companies in South Korea (as elsewhere) are trying to enhance the ‘humanity’ of the physical space, so that consumers can get the most out of personal interactions. They are also trying to create links between the virtual and physical worlds. The experience economy is booming, with brands going all out for curated and memorable experiences.
9. Peter Pan shoppers
Peter Pan was the archetypal man who did not want to grow up, and there are an increasing number of Korean adults who similarly never want to grow up. They buy products that evoke childhood memories and put pressure on themselves to keep looking younger and more youthful. They pursue fun for the sake of fun and actually remain big kids. This may be a result of longer life expectancy and societal pressure to conform, Seoul University believes.
10. Uncertain times
Globally, the cost-of-living crisis and volatile geopolitics are playing tricks on the economy, and Korean consumers are keeping their purses closed as well. The South Korean economy is expected to grow by only 1.8 % in 2023 due to a significant drop in export growth and a steady decline in investment.
Private consumption is even estimated to fall by 3.1 % as real purchasing power weakens due to high inflation and consumption of goods decreases due to rising market interest rates. South Korea will also be eagerly awaiting a calmer autumn, when inflation slows down and consumer confidence – hopefully – recovers.
In October, RetailDetail invites you to an unforgettable RetailHunt to Seoul. Do not miss out on an unique opportunity to learn from a society that leads the way in terms of demographic changes as well as fashion, food and technology.