Department Stores Thrive While Supermarkets Struggle: Widening Consumption Polarization

[Anchor]

As the number of tourists visiting Korea increases and the stock market remains bullish, domestic department stores have seen a significant surge in sales. However, sales at large supermarkets have actually declined, highlighting a growing polarization in consumption patterns.

Shim Woo-seop reports.

[Reporter]

A duty-free shop inside a department store last weekend.

Cosmetic and clothing stores are packed with foreign tourists, including those from China.

The K-beauty craze and the weakness of the Korean won have played a significant role.

[Yang Jiaye & Wu Shuying / Chinese Tourists: We usually buy cosmetics or skincare products when we come to Korea, and they are definitely cheaper than in China. The shopping environment and purchasing experience in Korea are also quite good.]

Long lines of domestic customers have formed in front of luxury brand stores.

Stores selling watches and jewelry worth tens of millions of won are much busier than usual.

[Department Store Customer: I think more people are shopping because stocks have gone up a lot. There are people (around me) who hold a lot of Samsung Electronics. And SK Hynix, too.]

The three major department store chains recorded their highest-ever sales in the first quarter, and sales in April also rose by more than 20% compared to a year ago.

In particular, sales of imported high-end brands and luxury goods surged by over 38%.

This is due to a combination of factors, including the sharp increase in foreign tourists, the so-called "wealth effect" from rising asset prices such as stocks, and increased income in the semiconductor industry.

However, not everyone in the retail industry is smiling.

Large supermarkets and major grocery chains, which are primarily used by everyday consumers, are struggling to escape a slump.

While the expansion of online shopping has had a major impact, analysts suggest that the burden of high prices is leading consumers to reduce both the variety and quantity of their purchases.

Some point out that the domestic demand recovery driven by semiconductor-led economic growth and the stock market boom is an illusion created by a "concentration on premium consumption."

[Cho Sang-hoon / Research Fellow at Shinhan Securities: In fact, department store shopping is very much purpose-driven. It appears that the "wealth effect" has not yet led to a "trickle-down effect" that would boost overall consumption, including at large supermarkets.]

There are growing concerns that if the burden of household spending on daily necessities remains high due to inflation, and if instability in oil prices and exchange rates persists, consumer sentiment could shrink even more rapidly in the second half of this year.

Reported by Shim Woo-seop | Video Editing: Kim Jong-tae | VJ: Jung Han-wook | Graphics: Seo Seung-hyun
※ Please note: This article was translated by AI and may contain errors.