Korea's economic growth rate is steadily declining and it is predicted that the trend will not change in 2019. However, despite the difficult the economy, more people are consuming. In particular, the sales of luxury items and premium goods in department stores are increasing. What is the strategy of department stores to survive in this economic recession?
It is the luxury goods that raise sales. According to the Lotte department store, the sales of luxury goods increased by 18.9% from January to October in 2018. This increase suggests that the uses of SNS such as YouTube and Instagram are successfully getting people to buy luxury goods by stimulating their consumption psychology. For example, on YouTube, there are channels to buy luxury goods and introduce them to people. Furthermore, this is because consumers overwhelmingly want to buy directly from department stores that are more reliable than online.
It is also remarkable that the luxury consumer market, which was considered to be the exclusive product of middle-aged women, is increasingly entering the demographics of those in their twenties and thirties. According to Shin-Segae department store, the sales growth rate of 2018 luxury sales for those in their twenties was 30.6%. The reason for these sale increases for those in their twenties is that they want to have a so-called ‘luxury one’ even if they can’t buy many things. The increase of consumption for women in their forties and fifties is notable in the sales of premium acoustic home appliances. According to Hyundai Department Store, sales of premium acoustic home appliances has increased by 25.9% in 2018. So the company changed the place of men’s fashion stores near premium acoustic home appliances to increase the rate of men’s fashion because they thought the main class of premium acoustic home appliances is middle-aged men.
Despite the economic recession, people who buy luxury goods continue to buy at the same rate. It also means that premium markets are unaffected by the economic recession. As a result, the polarized consumption phenomenon is becoming extreme in the premium and low-end markets.
Typically the increase in consumption is when the Growth Domestic Product GDP of a country start to rise. However, it is ironic that consumption is increasing despite the economic recession. Some Spending money on clothing, food, and housing is necessary but overspending is not good. Therefore, we should raise awareness about having reasonable consumption habits.