Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Department store sales spike on 'revenge spending'
By Lee Min-hyung
Spending at department stores reaches 25-year-high
By Lee Min-hyung
Sales at the nation's department stores set a new 25-year high in February, in an apparent sign of so-called “revenge spending” in the wake of the COVID-19 economic doldrums experienced throughout 2020.
According to data from Statistics Korea, consumer spending at department stores surged by 33.5 percent in February, compared to a year ago, the largest growth since February 1996. The statistics authority started compiling data from 1995.
This is widely seen as a post-lockdown rebound here after the economy contracted 1 percent last year.
Statistics Korea said domestic consumption is showing signs of bouncing back after bottoming out in February 2020 when department store sales declined by 21.2 percent from the year before.
Other data from the Bank of Korea also indicated a similar pattern, raising hopes for an overall economic rebound. The composite consumer sentiment index (CCSI) reached 100.5 in March, up by 3.1 points from the previous month, according to data from the central bank.
This is the first time the figure has topped 100 since January last year before fears of the pandemic started weighing on the economy. The CCSI refers to households' composite outlook in a total of six specific sectors ― such as forecasts for their spending and their economic situation. When the figure surpasses 100, consumers expect their living conditions or incomes to improve.
The reviving consumption sentiment was largely because more people jumped into the spending spree from the beginning of 2021 after being forced to stay indoors amid fears of the virus spread throughout last year.
Visitors are seen at a department store that takes the shape of a multi-complex shopping mall in Seoul, Monday. Yonhap
Sales at Hyundai Department Store surged by 74.1 percent in March 2021 from the previous year on the effect of the consumption recovery and the opening of its new department store, The Hyundai Seoul, in late February.
Statistics Korea also said its sales index for durable goods ― such as cars and electric devices ― surged to 141.5 points as of February. In December 2019 before the coronavirus fears started to weigh on the economy, the figure reached 127.9. The authority explained more people showed interest in purchasing electronic devices or furniture after the COVID-19 pandemic left them spending more time indoors.
But the sales index for semi-durable goods ― such as clothes, shoes and bags ― declined to 98 in February. This was a drop of seven points from December 2019.
Experts said the sales surge at major department stores was obvious “revenge spending” at a time when people are resuming their outdoor activities.
“Department stores do not restrict the number of visitors despite the pandemic, and this is the key reason why their sales soared for the past few months,” said Kim Dae-jong, professor of business administration at Sejong University.
Sales of fashion goods have not recovered, as the authorities are still restricting public face-to-face meetings, he added.
“In contrast, consumption of furniture and electronic devices is bouncing back here because the public still prefer to stay indoors amid lingering fears of infection, so they are spending more on appliances,” he said.