Luxury 'Revenge Spending'... Department Store with 'Annual Sales of 1 Trillion Won' Doubles in One Year

Daegu Shinsegae Followed by Hyundai Apgujeong Main Store Also Surpasses 1 Trillion Won in Sales This Year
Luxury Run Demand Continues, Expected to Exceed Pre-COVID-19 Performance
Customer Spending Sentiment Recovers but Overseas Travel Difficulties Likely to Sustain Growth

Riding the wave of revenge consumption fueled by the prolonged COVID-19 pandemic, the number of department stores with annual sales exceeding 1 trillion won is expected to double compared to last year, reaching 10 stores.

Stores with 1 Trillion Won Sales Increase from 5 to 10

According to industry sources on the 10th, following Daegu Shinsegae last month, Hyundai Apgujeong Main Store officially surpassed 1 trillion won in annual sales the day before, bringing the total number of stores exceeding 1 trillion won in annual total sales (transaction amount) to 7 (including Shinsegae Gangnam Store, Lotte Main Store, Lotte Jamsil Store, Shinsegae Centum City Store, and Hyundai Pangyo Store).

Last year, Lotte Busan Main Store, Hyundai Trade Center Store, and Galleria Apgujeong Luxury Hall, which had total sales in the range of 800 billion to 900 billion won, are also expected to achieve 1 trillion won in sales within this year unless there are special variables. This means that a total of 10 department stores will record annual sales of 1 trillion won this year alone.

Jongdae Park, a researcher at Hana Financial Investment, explained, "With the opening of new stores and the addition of luxury brand rush demand, the scale of domestic department store sales has already surpassed the pre-COVID-19 level of 2019 by the third quarter of this year," adding, "Consumer sentiment has recovered due to the with-COVID-19 policy, but overseas travel remains difficult, so performance is expected to improve further."

Increased Luxury Demand Leads to Trillion-Won Sales

The reason department stores have achieved record-breaking performance is due to the impact of COVID-19 continuing over the past two years. Despite deteriorating consumer sentiment, revenge consumption has greatly expanded, with consumers sparing no expense on high-priced luxury goods, and the 20s to 30s MZ generation (Millennials + Generation Z) joining the luxury purchasing trend, leading to continuous "open runs" at major department store luxury brand shops.

Hyundai Apgujeong Main Store, spanning from basement level 2 to the 5th floor above ground with a sales area of about 9,700 pyeong (approximately 32,000 square meters), is not large in size but houses high-end brand stores such as the so-called "Ae·Ru·Sha" (Herm?s, Chanel, Louis Vuitton), as well as Rolex and Jaeger-LeCoultre.

Daegu Shinsegae also contributed to joining the 1 trillion won sales club by firmly establishing its image as a luxury department store housing all of Ae·Ru·Sha, having consecutively attracted Herm?s in December last year and Chanel in March this year. Ultimately, the increased demand for luxury goods is interpreted as nearly doubling the number of stores with annual sales exceeding 1 trillion won.

Korean Luxury Market Reaches Record Size

The size of the domestic luxury market, as compiled by market research firm Euromonitor, rapidly grew from 13.11 trillion won in 2016 to 14.34 trillion won in 2018, and 14.9964 trillion won in 2020. Although the global luxury market size recorded 286.9 billion USD (344 trillion won) last year, a 19% decrease from the previous year, the domestic market grew significantly. This year, it is expected to surpass 15 trillion won, marking the largest scale ever.

Competition among department stores to capture luxury customers is intensifying. Lotte Department Store Main Store is undergoing a renewal to significantly expand overseas luxury brands by next year, and following Jamsil Store, Gangnam Store and Bundang Store will also be newly remodeled. Shinsegae Department Store launched a major spatial innovation in the third quarter of this year by introducing a mezzanine floor at Gangnam Store and opening the largest luxury cosmetics specialty hall in Korea. Hyundai Department Store Pangyo Store, preparing to open a Herm?s store early next year, is reportedly in close consultation with the brand to also attract Chanel.

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