Not as good as before... Department stores see 10% sales rebound with spring sale relief

Lotte, Shinsegae, Hyundai Sales Growth
Average 10.1% Increase Compared to Previous Week
Lotte Department Store Soars 17.9% Compared to Previous Week
Department Store Industry Expects Boost from Improved Consumer Sentiment

[Asia Economy Reporters Minyoung Cha and Seungjin Lee] As social distancing measures due to the novel coronavirus infection (COVID-19) have been fully implemented, department stores have launched their spring regular sales. A breath of fresh air has finally blown through the retail sector. Although sales still lagged compared to last year, performance improved compared to the previous week, providing some relief to department stores and their partners.

◆First Regular Sale "Not as much as before, but..."= On the 4th, when major domestic department stores launched their first regular sales of the year, Lotte Department Store’s main branch in Jung-gu, Seoul, saw a crowd quite different from the previous week when customer visits had sharply dropped due to COVID-19. Although the number of customers still did not reach the levels seen during previous sale periods, some stores such as cosmetics and kids’ fashion were bustling with customers. Kwon Juyun (pseudonym), a housewife in her 40s, said with a smile, "I hardly went out, but hearing about the sale, I came to the department store after several months to refresh my mood, and it feels new."

At the same time, spring flowers bloomed at the women’s fashion corner of Hyundai Department Store’s main branch in Apgujeong, Seoul. As daytime temperatures rose sharply, many browsed linen jackets and sleeveless dresses. Yuminha (pseudonym), a sales clerk in her 40s at the women’s clothing store, said, "Because of the severe recession, the sale effect is not as strong as last year, but the atmosphere seems a bit better than last week. Rather than new customers, existing department store customers seem to stop by the lounge for a cup of tea during the sale."

On the afternoon of the 3rd, at the Lotte Department Store main branch in Jung-gu, Seoul. A sculpture announcing the spring regular sale is installed in the middle of the department store.

◆Retail Sector "Expecting Improvement in Consumer Sentiment"= During the spring regular sale period from March 3 to 5, sales of the three major department stores increased by an average of 10.1% compared to the previous week (March 27?29). Lotte Department Store saw the largest growth at 17.9%, followed by Shinsegae Department Store at 7.1%, and Hyundai Department Store at 5.3%. However, compared to the previous year’s bargain sale period, all three companies showed declines due to the impact of COVID-19: Shinsegae (-18.2%), Lotte (-14.2%), and Hyundai (-12.0%).

Lotte Department Store’s sales rose 17.9% from the previous week, showing a marked improvement. By category, accessories (70.3%), home appliances (67.8%), overseas luxury goods (24.6%), and men’s fashion (18.6%) all showed generally balanced growth. However, spring fashion demand took a direct hit, with women’s fashion alone declining by 28.0%. It is interpreted that the '40s Practical Products Exhibition' selected directly by Lotte Department Store buyers had an effect. Lotte Department Store sold famous brand products such as 'Est?e Lauder,' 'Adidas,' and 'Philips' at up to half price. Demand for kids’ items during the school season also contributed.

Shinsegae Department Store’s sales increased by 7.1% compared to the previous week. The luxury goods sector saw the largest growth at 15.3%, followed by sports at 6.3%, women’s fashion at 2.9%, and men’s fashion at 0.1%. At the Hoehyeon main branch, the fourth-floor sports store, popular among younger customers, was crowded. A sales clerk at a sports brand said, "Customers are increasing every week," explaining, "As the weather warms up, people engaging in outdoor activities and students preparing for the new semester, although school has not yet started, are purchasing products, increasing sales by 10% compared to the previous week."

Hyundai Department Store’s sales rose 5.3% compared to the previous week. By sector, luxury goods increased by 9.3%, living goods by 8.1%, and fashion by 3.1%. This is attributed to limiting target customers by providing plus points and discount coupons to 7.7 million members of Hyundai Department Store’s membership program 'H Point.' At the Apgujeong main branch, a food hall employee said, "I don’t see much difference from usual," while a luxury fashion official said, "A few welcome regular customers visited after a long time and looked at jackets and shoes."

There is also an expectation that the department stores’ spring regular sales will have an effect on improving consumer sentiment rather than simply driving immediate sales. A department store industry official said, "Compared to the previous year’s bargain sale period, the sales decline looks large, but compared to the more than 30% decline recorded between late February and early March, the situation is much improved."