 The economic downturn appears to be initiating changes in shopping behaviors across the age groups, who are making different choices over where to rein in their spending. / Korea Times file |
By Kim Tong-hyung
Young people are not adding to their wardrobes while older workers are scrapping insurance contracts as no one seems immune to the credit crunch, judging by credit card purchase records. The silver lining is that spending on alcoholic drinks is also declining, indicating that people have yet to begin drinking their economic pain away.
The double blow of collapsing consumer spending and faltering exports is threatening to derail the country’s fragile recovery. The subduing economic activity is aggravating the erosion in family finances driven by stagnant wages, unemployment and historically high levels of personal indebtedness, highlighting rising discontent as Koreans prepare to elect a new president in December.
The growth in credit card spending pulled back sharply during the first six months of the year, according to the Bank of Korea (BOK), as consumers continued to rein in their spending on most products and services.
Card purchases reached 1.51 trillion won (about $1.3 billion) per day in the January-June period, up just 3.3 percent from a year earlier. The annual pace of growth was measured at 11.2 percent in the first six months of last year and 8 percent in the six months that followed.
Hana-SK Card, a joint venture between the Hana Financial Group and mobile phone carrier SK Telecom, confirmed that the downturn is significantly altering spending habits and different age groups have different ideas about how to save money.
Hana-SK customers in their 20s have been reducing their purchases every month since the fourth quarter of last year. They spent a lower than expected 11 billion won on clothes and other fashion items during the April-June period this year. Clothes are no longer a top-10 purchase item for this age group, for the first time since the financial crisis in the late 1990s, according to Hana-SK officials.
The company’s customers in their 20s and 30s have been spending more on household items like water heaters, furniture, wallpaper and white goods. This is a reflection of the country’s housing woes, company officials said. With the transaction of homes evaporating amid a freefall in prices, the demand for rent has been exploding and forcing a large number of tenants and converted first-time buyers to scurry for better deals.
During the second quarter, Hana-SK customers in their 20s swiped 13.9 billion won worth of household items, which came in at eighth on their purchase list. It was the first time ever that these products made the top 10. Customers in their 30s spent 43.4 billion won on these items.
While spending on insurance premiums has been traditionally high among people in their 30s or 50s, they are no longer in their top 10s.
The bad economy wasn’t bad enough to significantly affect the zeal for quality child education. Parents in their 30s spent 80.6 billion won on child education, which was a top-five spending item for the age group.
Hana-SK customers in their 40s spent 42.9 billion won during the second quarter at bars and other places of entertainment, representing a smaller proportion in their spending compared to last year.
Customers in their 40s and 50s are spending more on telecommunications fees compared to last year as smartphones and other mobile Internet devices became conventional.
``Our data draws a vivid picture of the downturn. The decline in the spending on clothes, insurance fees and entertainment sticks out from the rest,’’ said a Hana-SK spokesman.
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