As South Korea continues to grapple with an ongoing economic slowdown, the luxury market is undergoing a notable shift in consumer spending. High-end beauty products are now outperforming expensive fashion items, including designer handbags and apparel, in terms of sales growth.
According to data released on Sunday from South Korea’s top three department store chains—Lotte, Shinsegae, and Hyundai—luxury beauty brands such as Prada, Hermes, and Givenchy saw a substantial increase in cosmetics sales by 16 to 24 percent in 2024. In comparison, sales of luxury fashion items grew at a more modest rate of 5 to 11 percent during the same period.
Breaking down the figures by retailer, Lotte Department Store reported a 20 percent surge in luxury cosmetics sales, while Shinsegae and Hyundai saw increases of 16.3 percent and 24 percent, respectively. In contrast, the growth in luxury fashion sales was slower across the same department stores—Lotte at 5 percent, Shinsegae at 6.2 percent, and Hyundai at 11.7 percent.
This trend, often referred to as the “lipstick effect,” emerges during economic downturns when consumers tend to shift away from high-cost luxury items and opt for smaller indulgences, such as high-end skincare and makeup products.
Min Da-hae, a beauty buyer at Lotte Department Store, explained, “With the prolonged economic slowdown, the demand for ‘small luxury’ items from prestige beauty brands remains strong.”
A representative from Hyundai Department Store echoed this sentiment, emphasizing that luxury beauty products are driving overall growth in the cosmetics segment, as consumers increasingly prioritize premium skincare and makeup over high-priced designer accessories.
E-Commerce Giants and Luxury Brands Capitalize on Beauty Growth
This shift is not confined to physical retail outlets. E-commerce platforms are also ramping up their luxury beauty offerings to cater to growing demand.
Coupang, one of South Korea’s largest online retailers, launched its Rlux (luxury beauty) platform in October 2024, increasing its lineup of premium beauty brands from 22 to 34, including global names like Lancome and Estee Lauder. Some of the platform’s most expensive products, such as anti-aging creams, are priced at up to $980.
Meanwhile, luxury fashion houses are expanding their presence in the beauty sector as they face continued challenges in their traditional markets. In a move to diversify revenue streams, Louis Vuitton announced plans to launch its first-ever cosmetics line, La Beaute Louis Vuitton, in fall 2025. Although specific details about product categories and possible standalone stores in South Korea remain under wraps, industry experts view the expansion into beauty as a strategy to offset the effects of weaker fashion sales.
This shift is also evident at LVMH (Louis Vuitton Moet Hennessy), the parent company of brands like Louis Vuitton, Dior, and Fendi. Despite a 2 percent drop in overall revenue to €84.68 billion ($91.5 billion) in 2024, the company saw growth in its fragrance and cosmetics division, with sales increasing by 2 percent. In contrast, its fashion and leather goods division experienced a 3 percent decline.
Prada, too, has been steadily expanding its beauty line since the launch of its cosmetics range in 2023. In August 2024, the brand introduced its beauty offerings in South Korea, opening locations at Shinsegae’s Gangnam branch and Hyundai Seoul. In January 2025, Prada Beauty unveiled its first standalone flagship store in Seoul’s trendy Seongsu district.
A Resilient Strategy Amid Economic Uncertainty
“Luxury brands maintain a loyal customer base even in times of economic uncertainty, but they are not immune to slowing sales,” noted an industry insider. “By expanding into cosmetics, they can secure more stable revenue streams that are less vulnerable to economic fluctuations.”
With global economic uncertainty lingering, the growing emphasis on beauty by luxury brands may reshape the high-end retail landscape, with South Korea emerging as a pivotal market in this evolving trend.
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