By Kim Tong-hyung
Staff Reporter
Korea has dozens of department stores, but the scene of their first floors seem to be pretty much predictable ― a Chanel fa?ade and arrays of illuminated shelves selling lipsticks, puffs and perfume.
And although it had been hard to find a mall that offers a lengthy explanation on why cosmetics brands always dominate the first floors, Hyundai Department Store seems to be the first outlet to offer some economic evidence to justify the traditional layout.
Hyundai, as with other major department store chains such as Lotte and Shinsegae, issues credit cards that can only be used at its own outlets.
The sales records of Hyundai's credit card users through November show that customers who bought cosmetics products from the department stores at least once were those who generated about 78.5 percent of total revenue. The number is a sharp increase from the 68.7 percent contribution from the same customer segment in 2004.
The buyers of luxury fashion products, in comparison, generated around 46 percent of the company's total credit card revenue, Hyundai officials said.
``This is not to say that the sales from luxury products weren't bigger than our revenue from cosmetics, which they were,'' said a Hyundai official.
``The goal was to identify how much a certain group of customers who bought a certain kind of product spent annually at our department stores, and how much they accounted for our overall revenue. We may say that we are getting more loyalty from buyers of our cosmetics products than our customers for expensive luxury products.''
When cosmetics buyers are the most generous spenders, it makes little sense for the department stores to force them to another floor when they could be opening their wallets from the gates.
The increasing sales from foreign visitors, mostly from neighboring Japan and China, are also a reason department stores crowd their first floor with cosmetics.
Aside from cosmetics customers, the buyers of bakery and other food products were also found to have loose purse strings, as they generated 76.5 percent of Hyundai's overall credit card revenue. Apparently, keeping the food aisles accessible at the B-1 levels, as most department stores do here, qualifies as a sound choice.