[Click eStock] "Shinsegae Benefits from Luxury Goods Despite Declining Department Store Competitiveness"

Mirae Asset Daewoo Issues 'Buy' Investment Rating and Sets Target Price at 360,000 Won... Closing Price on 3rd at 254,000 Won

Shinsegae Department Store Gangnam Branch (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] Despite the decline in competitiveness of the department store channel, Shinsegae is expected to benefit from luxury goods, according to an analysis.

On the 4th, according to Mirae Asset Daewoo, Shinsegae has the highest proportion of luxury sales among department stores, at about 30%, compared to its competitors.

The decline in competitiveness of the department store channel became inevitable due to the impact of the novel coronavirus disease (COVID-19). The dependence on online channels has increased, and online shopping platforms are evolving with the enhancement of fulfillment and live commerce functions. Researcher Kim Myung-joo of Mirae Asset Daewoo explained, "This year as well, the penetration rate of online sales in clothing and accessories is accelerating, which will be a factor in the decline of the department store channel's competitiveness."

Luxury goods are considered a category relatively free from online consumption penetration. This is because the average spending per customer is high, the desire to see and buy is strong, and the brand's pricing policy is consistent. Researcher Kim said, "Although the decline in department store channel competitiveness is inevitable with the growth of online channels, Shinsegae, which has a high proportion of luxury sales, will not suffer significant sales damage due to the decrease in the number of customers purchasing mid-priced clothing and accessories," adding, "Since Shinsegae has a high proportion of luxury sales, the decrease in the number of customers purchasing mid-priced clothing and accessories can be partially offset by an increase in average spending per customer due to the trickle-down effect." He further added, "Although the department store channel has not yet fully normalized due to the impact of COVID-19, Shinsegae is expected to achieve the fastest normalization due to steady demand for luxury goods."

Mirae Asset Daewoo gave Shinsegae a 'Buy' investment rating with a target price of 360,000 KRW. The closing price on the 3rd was 254,000 KRW.

This content was produced with the assistance of AI translation services.