As the economic downturn persists, South Korea’s luxury market is witnessing a shift in consumer spending habits, with high-end cosmetics sales outpacing those of expensive fashion items like designer handbags and apparel.
According to the retail industry on Sunday, luxury beauty brands such as Prada, Hermes, and Givenchy saw their cosmetics sales rise by 16–24 per cent in 2024 across South Korea’s top three department store chains – Lotte, Shinsegae, and Hyundai. In contrast, luxury fashion sales at these retailers grew at a much slower pace of 5–11 per cent during the same period.
By retailer, Lotte department store’s luxury cosmetics sales surged 20 per cent, while Shinsegae and Hyundai recorded increases of 16.3 per cent and 24 per cent, respectively. These figures far outpaced the modest growth in luxury fashion sales at each department store—around 5 per cent, 6.2 per cent, and 11.7 per cent, respectively.
The trend, known as the “lipstick effect,” emerges during economic downturns when consumers forgo big-ticket luxury items in favor of smaller indulgences like high-end lipsticks and eyeshadows.“
With the prolonged economic slowdown, the demand for ‘small luxury’ items from prestige beauty brands remains strong,” said Min Da-hae, a beauty buyer at Lotte department store.
A Hyundai department store representative echoed this sentiment, noting that the luxury beauty segment is driving overall cosmetics sales growth, as consumers opt for premium skincare and makeup instead of costly designer bags.
E-commerce and luxury brands expand beauty offerings
The shift is not limited to brick-and-mortar stores. E-commerce giants are ramping up their luxury beauty business to meet growing consumer demand.
Coupang, one of South Korea’s largest online retailers, launched its Rlux (luxury beauty) platform in October 2024, expanding its roster of premium beauty brands from 22 to 34, including international names like Lancome and Estee Lauder. Some of the most expensive products, such as anti-aging creams, are priced as high as US$980.
Luxury fashion houses are also expanding into beauty as global economic uncertainty weighs on their traditional markets. Louis Vuitton announced plans to launch its first-ever cosmetics line, La Beaute Louis Vuitton, in fall 2025.
While details regarding product categories and potential standalone stores in South Korea remain undisclosed, industry experts see this as a strategic move to offset weaker fashion sales.
The luxury sector’s shift toward beauty is underscored by Louis Vuitton Moet Hennessy (LVMH), the parent company of Louis Vuitton, Dior, and Fendi. In 2024, LVMH’s revenue fell 2 per cent to €84.68 billion ($91.5 billion), with its fashion and leather goods division declining 3 per cent, while fragrance and cosmetics sales grew 2 per cent.
Prada has also been expanding its beauty footprint since launching its cosmetics line in 2023. In August 2024, the brand entered the South Korean market, opening locations at Shinsegae Department Store’s Gangnam branch and the Hyundai Seoul. In January 2025, Prada beauty opened its first standalone flagship store in Seoul’s trendy Seongsu district.“Luxury brands maintain a loyal customer base even in times of economic uncertainty, but they are not immune to slowing sales,” said an industry insider. “By expanding into cosmetics, they can secure more stable revenue streams that are less affected by economic fluctuations.”
As the global economy remains uncertain, the luxury industry’s increasing focus on beauty could redefine the landscape of high-end retail, with South Korea emerging as a key market for this evolving trend.
This story was originally published by Lina Jang, via Korea Bizwire.
