Buying More Luxury, Cutting Back Elsewhere... The Growing 'K-Shaped Consumption'

The proportion of luxury brands in the sales of the country's three major department stores has been shown to have surpassed an average of 40%.

According to sales trend statistics for major distributors from the Ministry of Trade, Industry and Energy, overseas famous brands (luxury goods) accounted for 40.0% of domestic department store sales in May.

This is a 3.9 percentage point increase compared to a year ago (36.1%).

In the case of Shinsegae Department Store, cited as having the most diverse range of luxury brands among the three major domestic department stores, the proportion of luxury goods in its sales for the first half of this year reached 44.4%.

While total department store sales in May increased by 24.5% compared to a year earlier, the growth rate of luxury goods sales recorded a much larger 37.3%, increasing the share of luxury goods in total sales.

Looking broadly at the first half of the year, Lotte Department Store's luxury goods sales growth rate from January to June this year was 35%.

Restricting the category to luxury jewelry among luxury items, the growth rate was 65%.

Shinsegae Department Store recorded a luxury sales growth rate of 35.0% and 68.8% for luxury jewelry.

Hyundai Department Store also recorded 35.2% for luxury goods and 60.2% for luxury watches and jewelry.

This is interpreted as the result of a surge in inbound foreign tourists and an increased demand to purchase luxury brands in South Korea due to the depreciation of the won.

Some analyses suggest that a 'K-shaped polarized consumption' pattern is strengthening, where the wealthy, who enjoy the wealth effect from rising stock prices, increase their consumption of luxury and premium products, while other consumers engage in rational consumption centered on low-priced channels such as convenience stores.

Sales at department stores and convenience stores have been on an upward trend for 11 consecutive months from July of last year to May of this year.

Conversely, sales at SSMs (Super Supermarkets) have been negative compared to the same period last year for six consecutive months from December of last year to May of this year.

Large discount store E-Mart has also seen its growth slow, with preliminary sales in May increasing by only 3.6% and June by 2.7% compared to a year earlier.

An official from the distribution industry said, "The trend of actively spending in areas one considers important while minimizing costs in other areas is strengthening," adding that "amid the polarized consumption trend, department stores are structurally benefiting sectors."
※ Please note: This article was translated by AI and may contain errors.