Consumers choose to travel abroad over purchasing luxury goods

The Korea Times

The Korea Times

Business

Sun, October 1, 2023 | 01:48

Companies

Consumers choose to travel abroad over purchasing luxury goods

Posted : 2023-03-22 16:48

Updated : 2023-03-22 17:23

Passengers check in at Incheon International Airport to travel to Japan on March 1. Yonhap

By Kim Jae-heun

A 33-year-old office worker surnamed Kil living in Seoul recently booked a flight to Bali. He decided to go on a trip as soon as he got permission to travel abroad from his company as the COVID-19 pandemic travel restrictions eased around the world.

"Every year, I give myself a present. I got a Burberry coat and Lemaire shoes during the COVID-19 pandemic, because I couldn't travel abroad," Kil said. "Now, I feel it's safe to go to another country and I am going to treat myself with a trip to Indonesia's most popular tourist spot this summer."

Another 33-year-old freelancer surnamed Lee in Seoul is planning to go to Japan with his friends.

"I heard luxury shopping is much cheaper in Japan than Korea these days. Luxury goods became too expensive here in the last few years," he said. "There is no reason to buy them in Korea when I can go on a trip to Tokyo and shop for clothing at a cheaper price there at the same time."

Luxury goods enjoyed extra popularity in Korea during the pandemic but this has been subsiding rapidly as soaring inflation and high interest rates hit people's wallets hard.

People mill about near luxury boutiques at a department store in Seoul, Oct. 26, 2022. Yonhap

The local top three department stores of Lotte, Shinsegae and Hyundai saw their respective luxury goods sales grow year-on-year by only 5 percent, 5.3 percent and 5.8 percent in January and February.

Considering that their sales growth in the same period of 2022 marked 35 percent for Lotte, 47.8 percent for Shinsegae and 20.8 percent for Hyundai, the rate has decreased significantly.

The retailers see the current economic slump as the main reason for stagnant luxury sales, rather than the brands' price hikes.

"The sales of luxury goods here grew very high in the last few years. It could look like the growth may have decreased due to the base effect. Luxury brands have always been raising their product prices and it cannot be seen as the main cause of decreasing sales growth," a Shinsegae Department Store official said.

Nonetheless, local consumers are voicing their dissatisfaction over too many increases in the price of luxury goods despite the economic slump.

"I know brands like Louis Vuitton, Chanel and Hermes wouldn't care about increasing their product prices continuously because they sell well regardless. But that is only the story of rich people. Middle-class people like me will probably choose to travel abroad with that money as COVID-19 concerns ease," Kil said.

jhkim@koreatimes.co.kr