Amid challenging economic times, an intriguing trend has emerged in South Korea. According to Hana Financial Group (HFG), the prevailing consumption trend for the year is centered around the concept of “small luxuries.” Even in the face of financial adversity, the young generation indulges in fine dining experiences or savors the aroma of high-end perfumes, carefully managing their finances. This shows the essence of the small luxury trend, where consumers find ways to enjoy life’s finer assets even during economic hardships. In November’s issue, The Granite Tower (GT) explores how individuals in South Korea are navigating through thick and thin by embracing both frugal consumption and moments of indulgence.

The lingering effects of the coronavirus disease (COVID-19), coupled with rising prices, have cast a shadow over many aspects of people’s lives. A peculiar shift is occurring in consumer behavior, which is driven by the desire for premium experiences and the pursuit of happiness. According to data from the Shinsegae Department Store, the sales of premium French perfumes, some priced as high as 640,000 Korean Won (KRW) per bottle, have witnessed significant growth in 2023, compared to the previous year. Particularly intriguing is that 80 percent of these purchases were made by the millennials and Generation Z (MZ generation), which reveals their liking for small luxuries. At first glance, the allure of indulging in omakase meals, even for pets, or treating oneself to Bingsu desserts at hotels, priced at a staggering 98,000 KRW, might seem at odds with the backdrop of economic restraint. Yet, this phenomenon is very much a reality, and it speaks to the coexistence of seemingly contradictory consumer patterns. 

Striking a Delicate Balance

Meanwhile, some individuals embrace extreme cost-cutting behaviors at the same time. This frugality is driven by the desire to save money for those cherished small luxuries. Recently, KakaoTalk open chatrooms, referred to as “beggar rooms,” have been garnering significant attention on social media. Inside these anonymous chatrooms, people scold each other for indiscriminate dining expenditures and compliment those who show thriftiness. Such chatrooms have proliferated on KakaoTalk, indicating that many young individuals are now interested in adopting a money-saving lifestyle after the popularity of “flex culture,” a term denoting the flaunting of one’s wealth, in recent years.

Driven by the desire to minimize unnecessary expenditures, individuals are also increasingly turning to discount items available at convenience stores and supermarkets. Emart24 reports a remarkable 25 percent surge in the sales of lunchboxes alone compared to the previous year. Moreover, the market for second-hand items has experienced substantial growth as reported by data from KB Securities in 2022, with applications like Joonggonara witnessing a surge in user activity. This delicate balance between frugality and luxury is reshaping Korea’s consumer landscape in unprecedented ways.

The Allure of Small Luxuries

How can these seemingly contradictory behaviors coexist in a society facing economic challenges? According to insights from the Korea Foodservice Industry Research Institute (KFIRI), this polarization in consumption patterns can be attributed to various external factors, including high prices, high interest rates, and endemics. KFIRI evaluated that consumers are obsessed with low-cost products due to the economic downturn, yet they continue to embrace premium dining experiences, finding intrinsic value in simply enjoying them even if these indulgences are less frequent. Professor Sung Yongjun (School of Psychology) stated, “Younger generations, even if they cannot afford high-priced Chanel clothing, can still buy Chanel lipstick, which means they are consuming within their means. The trend is to focus on the present rather than the future, and spend on things that hold value for themselves within their affordable range.” South Koreans have coined terms like “gashimbi,” which encapsulates the concept of considering psychological satisfaction in relation to the price paid for an item. This concept reveals the willingness to invest in items that provide not just material value but also significant emotional gratification. While many individuals may not have the financial means to purchase expensive luxury goods, they have found alternative ways to satisfy their craving for premium experiences.

In the realm of consumer behavior, engaging in the small luxury trend can often lead to a profound sense of accomplishment and happiness. Individuals find joy in acquiring items that bring them happiness, but also often garner attention from others. According to a survey conducted by Mbrain in 2023, 72.7 percent of 1,000 consumers replied that visiting expensive restaurants enriches their life experiences. Moreover, when asked about whether dining at highend restaurants constitutes as an investment in oneself, 44 percent of respondents agreed. In essence, consuming small luxuries has evolved beyond a mere expenditure; it has become an investment in one’s overall well-being.

Professor Sung believes that showcasing their consumption on social media platforms like Instagram makes the younger generation even happier. He added, “These cultural behaviors will continue to grow in the future, due to the influence of social media.” Meanwhile, valid criticisms toward the small luxury trend in Korea exist, with some asserting that those consumptions are just a bluff to show off. It is vital that consumers continuously evaluate their consumption choices, ensuring that they remain well within their means and financial control. Managing finances wisely would lead to a more fulfilling and sustainable approach to life’s pleasures.

Looking into the future, the enduring value of experiences has the potential to redefine consumption patterns further. South Korea may see a surge in activities that promote cultural enrichment, such as museum visits or participation in immersive events, as individuals prioritize experiences that foster personal growth and meaningful connections. By embracing both the frugal and indulgent sides of the small luxury trend, South Koreans are discovering that it is indeed possible to thrive through thick and thin. It is a testimony to Koreans’ ability to adapt, find joy in the simple, and ultimately, enjoy the diverse moments of life.