“We consider South Korea as a developed market, meaning it is no different to the UK or the US… Korean consumers are demanding and expect high-performing products.” Hari Nair: Managing Director, Kimberly-Clark’s.
Recently everything seems prefixed with a K: K-Pop, K-food, K-beauty, K-movies; why not go to your local K-culture festival, sure there must be one near you, or coming soon. Korean culture is on fire at the moment and has been warmly received. Domestic franchisors have, quite rightly, been riding this wave and rapidly expanding internationally-China being a Korea franchisors first choice. However for an overseas franchisor looking in, 韓國代購 what is this market like?
GDP was US$1.2 trillion in 2013 and predicted to rise as consumer spending and confidence grows through 2014 and 2015. The Hyundai Research Institute latest report predicts Korea will expand by 3.5% in the first half of 2015 and 3.6% in the second half.
Considering Korea’s comparatively slower Asian growth, it remains a good target for franchisors owing to historical years of stable growth, an affluent consumer base and early advancement of the country. The average disposable income per household per month was US$3150 in the second quarter 2014, a rise of 2.8% from the second quarter 2013, with significant rises in bakery, confectioneries & snacks, coffee & tea, and juice & beverages sectors (Statistics Korea).
The demand for foreign brands spans a range of sectors and recently a broader range of channels. 65% of the population is classified as middle-class (OECD) so unlike many other Asian countries there is not the general trend of a new, emerging middle-class. Supported by media and a relatively high degree of travel experience, the Korean consumers are knowledgeable in a developed, globalised market.
Korean consumers have a strong purchase history of foreign brands so as well as valuing money, they have a high understanding of brand philosophy and marketing channels. They will readily try new products and are always seeking new tastes and ways to improve their lifestyle and image.
For a franchisor, the marketing has to be more sophisticated to match the level of the consumer. For example, nearly 80% of the population is online, making it the most connected country on the planet! and they love their credit cards. Annual credit card transactions are over 65% higher than the USA. This combination means a high proportion of online spending and retail ecommerce is predicted to touch $25.3 billion by 2017 (Borderfree). Any marketing strategy has to be multi-channel and use aspects of social media to advertise brands and utilize the technology to offer more efficient shopping channels and delivery.
Korea’s population is ageing and urbanized. The median age in 2012 was 39.1 years and the over 60 group is predicted to account for nearly 25% of the population by 2020 (Statistics Korea). Some franchisors may already target this older market whereas others may be able to easily adapt or extend to target this group. However for the rest of us do not despair, as PwC reminds us, 70% of the population remain within most retailers target demographic of 15-64 years old.