Department Stores Focus on Luxury Brands Amid 'Solo Boom'

Despite Online Competition and COVID-19
Department Store Luxury Sales Rise for 7 Consecutive Months
Double-Digit Growth Since April

Clothing Sales Slump in Key Products
Survival Strategy Focuses on Strengthening Luxury Goods
Shinsegae Department Store Gangnam Fills 2nd and 3rd Floors with Luxury Brands
Lotte Department Store Opens Men's Luxury Accessories Select Shop

[Asia Economy Reporter Seungjin Lee] Amid the overall economic downturn caused by the novel coronavirus infection (COVID-19), the overseas luxury goods market continues to thrive alone. In particular, even in the department store industry, which has been experiencing sluggish sales due to the growth of the online market and the impact of COVID-19, luxury sales have continued to rise, leading each company to strengthen luxury stores as a survival strategy.

According to the distribution industry on the 28th, the luxury sales of the three department stores?Lotte, Shinsegae, and Hyundai?have been on the rise for seven consecutive months since last April. The only month this year when luxury sales declined was March, when fears of COVID-19 spread peaked, meaning that love for luxury goods has continued virtually throughout the year.

In the case of Lotte Department Store, luxury sales have shown double-digit growth since April, when sales increased by 11% compared to the previous year. Even during the previous weekend (October 23?25), luxury sales increased by 28% compared to last year. Shinsegae and Hyundai Department Stores showed the same pattern, maintaining double-digit growth in luxury sales for seven months from April to the previous weekend.

Especially in August and September, when COVID-19 cases surged and social distancing levels 2 and 2.5 were implemented, luxury sales increased significantly. Hyundai Department Store's luxury sales in August and September grew by 42% and 39%, respectively, compared to the previous year.

On the other hand, women's clothing, the main product of department stores, has not recovered sales for several months, causing overall department store sales to stagnate. Lotte Department Store's women's clothing sales showed double-digit negative growth from April to September, contrary to luxury goods. During the same period, overall department store sales recorded between -12% and -9%. Although women's clothing sales slightly increased in October as consumer sentiment revived, it was minimal considering the negative growth over the past several months.

Since sales of the existing main product, clothing, have not shown signs of recovery for several months, the department store industry has begun adopting a survival strategy of strengthening luxury goods. For example, Shinsegae Department Store's Gangnam branch renovated its 2nd and 3rd floors into luxury stores. Typically, women's clothing, which accounts for more than half of department store sales, is located on the 2nd and 3rd floors for female customers. However, at the Gangnam branch, the proportion of luxury sales rose to 40%, leading to the 2nd and 3rd floors being filled with luxury goods and women's clothing being moved to the 4th and 5th floors.

Lotte Department Store recently opened 'Smalte,' Korea's first premium men's accessories select shop. This was due to a significant increase in demand for men's accessories at 'Tops,' a foreign direct sourcing luxury select shop operated by Lotte Department Store. Tops' more than 40 stores nationwide saw sales increase by 30% from January to September compared to the same period last year. Lotte Department Store plans to further subdivide luxury stores to increase customer inflow. With the main store undergoing its first renovation in 40 years since opening, it plans to significantly strengthen luxury stores by 2022.

A distribution industry official explained, "Since COVID-19, luxury purchases by the MZ generation (born early 1980s to early 1990s) have increased significantly, and the luxury market is expected to grow even more centered on the MZ generation. Each industry plans to continuously strengthen luxury stores by attracting luxury brands preferred by the MZ generation."

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