Chung Yoo-kyung's 'Luxury and Royalty Strategy' Worked... Shinsegae Expands Experiments This Year

Record High Operating Profit of 517.3 Billion Won Last Year
Department Store's Strong Performance Driven by Focus on Luxury Brands and Innovation Experiments
Successful Paid Membership at Gyeonggi Branch Food Hall
Additional Introduction at Daejeon Shinsegae This Month

Jung Yoo-kyung, President of the Department Store Division at Shinsegae Group

[Asia Economy Reporter Kim Yuri] Shinsegae achieved record-breaking performance last year. It is evaluated that Jeong Yu-kyung, Shinsegae's General President (photo)'s 'luxury and loyalty strategy' worked.

According to the industry on the 10th, Shinsegae's operating profit last year was 517.3 billion KRW, an increase of 484.6% compared to the previous year (88.5 billion KRW). This is the highest performance ever, surpassing 468.2 billion KRW in 2019 before the COVID-19 pandemic. Sales increased by 32.4% to 6.3164 trillion KRW from 4.3824 trillion KRW the previous year.

The department stores led the strong performance. Last year, Shinsegae Department Store's sales were 2.1365 trillion KRW, a 20% increase from 1.781 trillion KRW the previous year. Operating profit exceeded double to 362.2 billion KRW from 179.8 billion KRW the previous year. Luxury sales increased by 44.9%, and overseas fashion (37.0%), women's fashion (22.2%), and men's fashion (20.8%) also grew steadily.

The market analyzed that Shinsegae's 'Metropolitan No.1 Street' strategy, a large-scale department store strategy centered on Gangnam, Seoul, matched the era of luxury preference. In particular, it is analyzed that General President Jeong's continuous efforts to secure luxury competitiveness since taking office were effective. Department stores equipped with the representative luxury brands Hermes, Louis Vuitton, and Chanel, collectively called 'Ae·Ru·Sha,' are located in four places nationwide including Seoul, Busan, and Daegu, and major store renovations focused on luxury shopping. Last year, the Gangnam branch introduced a mezzanine for the first time in the industry through renovation, placing luxury brands on the 2nd and 3rd floors to optimize VIP customer flow. The first floor introduced the largest luxury cosmetics specialty hall in Korea. The Gyeonggi branch opened a luxury and cosmetics specialty hall spanning two floors.

Experiments by branch also received positive evaluations. A representative example is the introduction of a paid membership for the food hall at the Gyeonggi branch. In July last year, the Gyeonggi branch introduced the industry's first paid food market membership called 'Prime Service,' which allows customers to purchase various products such as Korean beef and fruits at discounted prices, resulting in a rapid increase in branch loyalty effects centered on VIP customers. Since its opening in July last year, sales from Prime membership customers increased by 15% compared to before joining until last month. The average monthly spending per customer was five times higher than non-members. The average monthly visit frequency was also three times higher for members. The number of members currently reaches 1,300.

Shinsegae's strategy is to quickly apply successful experiments from one branch to others. The next target after the Gyeonggi branch is 'Daejeon Shinsegae Art & Science.' From the 11th, Shinsegae will introduce the paid food hall service at Daejeon Shinsegae as well. New members will immediately receive a welcome gift worth more than 55,000 KRW in annual fees to increase benefits, and buyers-selected products such as Korean beef and fruits will be sold to Prime customers with discounts up to 40%. Daejeon Shinsegae, being developed as a landmark in the Chungcheong region, is expected to succeed due to the high-income population in nearby Sejong City and the diverse product assortment.

Shinsegae plans to continue various experimental innovations in the first half of this year. Successful cases will be sequentially applied to all stores as a strategy to overcome the burden from last year's record operating profit. Shinsegae plans to introduce a foreign brand specialty hall within the SSG.com department store section and hold a grand opening of the luxury hall at the Gyeonggi branch in the first half of this year. A department store official said, "In addition to strengthening core business competitiveness, we will prepare for the new normal era focusing on online and digital."

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