Department stores refurbish, focusing on luxury brands
Galleria Department Store in Gwanggyo, Gyeonggi Province / Courtesy of Galleria Department Store
By Kim Jae-heun
Major department store franchises here are refurbishing their branches nationwide, centered around strengthening the luxury sector as clear evidence shows that an increasing number of young customers are becoming more inclined to purchase high-end fashion products.
According to the Ministry of Trade, Industry and Energy, the sales of Lotte, Shinsegae and Hyundai department stores in the first half of the year fell by 14.2 percent compared to last year. Sales of casual men's and women's brands decreased by 23 percent and 34.9 percent, respectively.
However, luxury brands have seen a 9.2 percent of increase in sales.
Galleria Department Store, which has comparatively more international high-end fashion labels at its branches than its competitors, was the only franchise that showed a sales increase between January and June, recording 4 percent.
Lotte recorded a 16 percent sales drop, followed by Hyundai and Shinsegae with a respective 10 percent and 7 percent.
Galleria only operates five outlets around the country and it has been focusing on attracting the “superrich” in different regions.
In September last year, it opened a separate facility outside its Daejeon department store for VIP customers only called “Maison Galleria.” The store invited selected customers and exclusively introduced them to its latest luxury items.
The concept of Maison Galleria was very well-received by the VIP customers and the department franchise opened another in Hannam-dong in the Yongsan District of Seoul, in March. This led to an 18 percent increase in sales at the Yongsan outlet moving it to second place from fourth in sales volume in the sector in the capital.
“We lost our international customers, who accounted for 10 percent of our sales, due to COVID-19 pandemic. However, we replaced them with new customers we attracted through our new VIP facility in Hannam-dong,” a Galleria Department Store official said. “Seventy percent of the fashion brands at our branch in Apgujeong-dong are global luxury houses and we plan to increase this in the near future. Our branch in Gwanggyo, Gyeonggi Province, will open a boutique with one of the three most popular designer labels ― Chanel, Louis Vuitton and Hermes ― within this year.”
Shinsegae also collaborated with Louis Vuitton to promote the men's fall and winter collection, for the first time, at a pop-up store in it Gangnam branch July 31. The branch previously opened temporary boutiques for Prada in January, Chanel in June and Bottega Veneta last month.
Young customers are credited with the increase in sales of luxury goods at the local department stores.
At Lotte department stores, the sales growth rate among young customers in their 20s and 30s increased 25.7 percent and 34.8 percent, respectively, in the first half of the year.
At Shinsegae department Stores, the rate also climbed by 20.3 percent and 30.1 percent in the same age group in the same period.
“We are seeing a decreasing number of young customers overall at department stores. However, we are seeing an increasing number of young customers who are purchasing luxury goods here. This is because they want to purchase high-end products after seeing them in real-life. Department store franchises are reflecting this by hosting more international luxury brands' boutiques in their outlets,” an industry source said.