Can't Stop Even COVID-19, Love for Overseas Luxury Brands

Department Store Sales Show Double-Digit Growth

Linked to the Polarization Trend in Consumption

[Asia Economy Reporter Lim Hye-sun] Despite empty department stores due to the novel coronavirus (Wuhan pneumonia) outbreak, overseas luxury brand stores remain prosperous. According to Lotte, Shinsegae, and Hyundai Department Stores, overseas luxury sales recorded double-digit growth compared to the same period last year during the past weekend (February 8 to February 9). Considering the sharp decline in overall department store visitors and sales, it can be concluded that the novel coronavirus did not deter the love for luxury goods.

Last weekend, sales at Lotte Department Store Avenue L in Jamsil increased by 35.7%. The Incheon Terminal branch and Busan Centum City branch also rose by 15.2% and 0.6%, respectively. On the other hand, Lotte Department Store's overall sales declined by 17% compared to the previous year. By product category, sales of women's fashion apparel and food decreased by 19.5% and 14%, respectively.

The situation was similar at Shinsegae and Hyundai Department Stores. During this period, Shinsegae Department Store's overall sales fell by 12.4% compared to the same period last year, but overseas luxury sales increased by 13.8%. In particular, sales at the Gangnam branch rose by 18.9%. Conversely, sales of women's fashion apparel, men's fashion apparel, and cosmetics decreased by 18%, 11.4%, and 12.1%, respectively. During the same period, Hyundai Department Store's overall sales dropped by 11.2%, but overseas luxury sales increased by 11.2% compared to the previous year. Sales of cosmetics (-5.5%), fashion (-13.7%), and food (-8.9%) saw significant declines. Online sales of overseas luxury goods also increased. Sales of luxury bags, belts, and high-end men's clothing grew by 2%, 51%, and 5%, respectively.

The fact that only overseas luxury goods escaped major setbacks is related to the polarization trend in consumption. Customers in their 20s to 40s are increasingly purchasing essential daily items online at ultra-low prices and spending the money saved on luxury goods. Moreover, high-priced luxury items costing hundreds of thousands of won tend to be preferred offline due to authenticity verification and face-to-face service. The perception that rarity enhances the value of luxury goods also plays a role. On February 9, Kim Yeon-ju (female, 39), who visited the Hermes store at Shinsegae Department Store Gangnam branch, said, "I visited Hyundai Department Store Trade Center and Apgujeong branches to buy a Picotin bag, but since they didn't have it, I came to Shinsegae Gangnam. I once waited several months after much deliberation, so I bought it immediately this time." The Hermes Picotin bag costs around 4 million won.

Demand for gifts in celebration of Valentine's Day on February 14 is also focusing on luxury goods. A Lotte Department Store official explained, "In overseas luxury, premium bags, watches, and jewelry from brands like Louis Vuitton and Chanel grew by more than 40%. The product categories gifted on Valentine's Day showed relatively higher sales growth than luxury apparel."