How the Covid-19 Crisis Turned Into an Opportunity for Korea’s Gold MarketBy Kay Lee, CEO, Wolgok Jewelry Foundation
Like anywhere else, Korea’s domestic consumer market, including the gold and gold jewellery sectors, was hit by the worldwide Covid-19 pandemic. What we thought was normal became non-normal and the good old past is not likely to be fully restored.
According to WJRC (Wolgok Jewelry Research Institute), the Korean jewellery market was estimated at US$4.9 billion in 2021, 3% higher from the previous year. The market, hit by Covid-19, saw a decline from the pre-pandemic years but marked a recovery in 2021.
Korea’s jewellery market has been traditionally divided by wedding and non-wedding purchases. General gold jewellery in the non-wedding jewellery market, which includes 84.6% of the total non-wedding market and 67.3% of the total market, recorded US$3.3 billion in sales and led the market recovery. The wedding market, which comprised 20.4% of the total market, has been steady at US$1 billion. However, it might be regarded as a “good defence”, considering the rapidly decreasing number of weddings, due to decreasing wedding age population and the trend to postpone weddings during the pandemic and to stay single or get married at a later age.
One of the most noteworthy changes in the jewellery market during the pandemic is an increase in online jewellery purchases. According to Euromonitor, Korea’s online jewellery market size in 2021 was estimated at US$370 million, an increase of 7.7% from the previous year. Despite the fact that the jewellery market has been highly traditional and rather conservative, this growth rate seems to be relatively significant and proves that the jewellery market is not an exception from the global trend of “untact” market expansion – a South Korean government policy that aims to spur economic growth by removing layers of human interaction from society. The pandemic has pushed the jewellery market further to e-commerce environment and this trend is most unlikely to be reversed, even after the post-pandemic situation.
Similar trends have been monitored in WJRC’s research. Before 2019, online jewellery purchases accounted for about 2–4% only. But, from the first half of 2019, it grew to 9.1% and then jumped to 16.2% in the first half of 2021.
In 2021, gold and jewellery recorded US$2.5 billion and US$942 million in imports respectively. In addition, both diamond/gem imports and jewellery exports saw their highest levels since WJRC started its market research in 2012. Exports reached US$353.75 million, an increase of 73.5%, while imports reached US$942.84 million, an increase of 62%. According to Euromonitor, Korea’s luxury jewellery market size is the fourth-largest globally, and is likely to grow further, influenced by “revenge spending from the pandemic” and “flex consumption by the MZ generation”.
Founded in 2009, Wolgok Jewelry Foundation (WJF), a non-profit organisation, has been contributing to the jewellery market by providing market research data, educating future jewellery market leaders, providing marketing consulting, and working with the gold and jewellery industry to deregulate and develop the market. For all these objectives, reliable market data is essential. However, it is also equally or even more important to let the data be fully accessible and utilised by the industry, consumers, media, and various government bodies and organisations.
WJF has been hosting various seminars and publishing research periodicals, newsletters, and reports. However, accessibility and custom-tailored data analysis were not fully available to people who needed data analysis for their own specific requirements when they wanted, due to the limitation of printed materials and physical spaces in the offline programs.
At the start of the pandemic, WJF started to invest in online data analysis service to make its research more widely available and accessible. As a result, WJF online data service was made available and free to everyone. In addition, WJF was assigned as the organisation to participate in the government’s AI learning data development project to spur innovation in the jewellery market. The consumer market is also being diversified. The traditional understanding of the mass market may vanish sooner or later as consumer profiles and expectations are getting more complicated and changing rapidly. In this sense, market and consumer research data are essential raw materials, which gold and jewellery industry must catch up with the consumers for survival. When this science is combined with creative insights, the future of the gold and jewellery industry may find a new opportunity a path forward.
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