Major retailers step up race to attract wealthy customers in Seoul
By Kim Jae-heun
Major Korean retailers are competing to win over an increasing number of wealthy customers in Seoul's Gangnam area, which is comprised of three districts in the affluent southern part of the capital, company officials said Monday. The move comes as Lotte, Shinsegae, Hyundai and Galleria struggle to rebound from a prolonged sales slump that was triggered by the COVID-19 pandemic.
Their strategy has been to open new foreign luxury brand shops and offer exclusive VIP membership programs for affluent consumers who have been eager to spend their disposable income on high-end merchandize after being unable to travel abroad or engage in other consumer activities due to the pandemic.
Shinsegae, a big player in southern Seoul, operates the country's most lucrative department store in Seocho District. In fact, Shinsegae became the first department store in Korea to achieve 2 trillion won ($1.62 billion) in sales in 2019 and continues to maintain that performance. Sales last year reached 2.5 trillion won.
Shinsegae has been focusing on the luxury goods business for a long time. It is one of the four department stores in Gangnam that has Hermes, Chanel and Louis Vuitton boutiques. There are only seven department stores in the country with all three boutiques under one roof.
Last year, Shinsegae renovated the second and third floors of its Gangnam branch to concentrate on luxury brands only. On the first floor, it introduced a special store selling luxury handbags.
“The Gangnam area is special for department stores because people living in that part of Seoul are very sensitive to the latest trends and it is where most of the wealthy people in the country live,” a Shinsegae Department Store official said.
Lotte, the nation's largest retail group in terms of sales, lags far behind in competition against Shinsegae in southern Seoul. Sales at its Gangnam branch totaled 500 billion won in 2021. Understanding the importance of the retail business in southern Seoul, Lotte has decided to rennovate its Gangnam branch hoping to beat Shinsegae.
Its new CEO Jung Jun-ho is planning to transform the branch to be more lavish than Galleria Department Store also in Gangnam, which is the symbol of luxury department stores in Korea.
“Our goal is to make the Gangnam branch a six star hotel when comparing it to the hotel business. Our store in Gangnam will distinguish itself from other department stores in the area by opening more luxury brands and further collaborating with them,” a Lotte Shopping official said. Lotte Shopping is in charge of the department store business in the group.
Hyundai Department Store in southern Seoul will introduce a VIP membership program for customers in their 20s and 30s to attract young and wealthy clients.
“VIP customers are important as they are responsible for more than half of our sales and most of them live in Gangnam,” a Hyundai Department Store official said.