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| Hyundai Department Store in Gangnam, Seoul / Korea Times file |
By Kim Jae-heun
Local department stores are seeing growing sales as the prolonged COVID-19 pandemic prompts customers to purchase luxury goods sold in physical stores, rather than online, as a form of stress relief. To entice customers to visit regularly, department stores have begun putting on art exhibitions and employing other marketing strategies.
Among 70 stores nationwide, 10 posted annual sales of more than 1 trillion won ($839.5 billion), with notable performance in the sale of luxury goods. This number is up from five stores in 2020.
Hyundai Department Store in Gangnam and Galleria Department Store in Apgujeong, both in southern Seoul, have joined the so-called "1 trillion club" for the first time since their establishments in 1985 and 1990, respectively. Shinsegae Department Store's annual sales have already penetrated 2 trillion won.
A number of factors contributed to this golden egg for local department stores, but international travel bans are the biggest reason.
"I've saved money that I would normally use to travel abroad. Also, because we are forced to stay home under the quarantine measures, I happened to spend a lot of time shopping for luxury goods online," 33-year-old office worker Park Ji-ho said.
Men's consumption of luxury goods also increased by 30 percent to 40 percent.
"We believe our strategy to target millennial customers and expand the number of boutiques in men's luxury fashion was effective," a Hyundai Department Store official said.
VIP customers, who usually spend 200 million won a year, have spent twice as much this year. Sales coming from those who purchase over 20 million won annually have also soared by 50 percent.
Shinsegae Department Store has built a VIP-only lounge to attract them to their stores and thus increase sales.
The rise of housing prices also played a part. Because purchasing property has grown out of reach for ordinary people, they may choose to buy luxury goods to in response to the hopelessness of expecting never to own a home.
"It has become almost impossible for young people to buy a home so they start to buy luxury goods to increase self-satisfaction," said Yeo Jun-sang, a professor at the Department of Business Administration of Dongguk University.
There are predictions that department stores' sales will decrease when countries lift travel bans.
However, with the outbreak of the Omicron variant and more countries maintaining border closures to prevent further virus spread, the outlook for local department stores remains promising.
