"This Summer, Going on a 'Baekcance' Instead of Overseas Travel" [Heo Midam's Youth Report]

Increase in Consumers Taking 'Baekcance' During COVID-19 and Long Rainy Season
2030 Generation Emerges as Major Buyers in Luxury Market
Experts Warn "Risk of Encouraging Overconsumption"

On June 26, customers were browsing luxury handbags from famous overseas brands at the duty-free luxury goods store in Lotte Department Store, Seo-gu, Daejeon. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] [Editor's Note] How is your youth remembered? From teenagers to college students and office workers, we deliver the joys and sorrows unique to 'youth.'

"I buy luxury goods instead of going on a trip." , "Does saving money really change the future?"

Recently, as COVID-19 and a prolonged rainy season overlapped, more consumers are choosing to visit nearby shopping malls instead of traveling. They enjoy shopping at department stores as a substitute for summer vacations.

In particular, the so-called 'Millennial Generation' in their 20s and 30s has emerged as major luxury buyers, allowing the department store industry to enjoy a 'solo boom.' Experts point out that the 'flex phenomenon' (the act of flaunting wealth or valuables) popular among young people may encourage overspending.

Office worker Kim (28) recently purchased a luxury wallet worth about 1 million won. Kim said, "I originally planned to travel abroad. But with COVID-19, I couldn't go. So I buy luxury goods with the money I would have spent on overseas travel." He added, "It's better to buy one expensive item than several cheap ones. Also, buying luxury goods is cheaper than traveling abroad, so the cost doesn't feel that wasteful."

The department store industry is enjoying a boom despite various adverse conditions such as COVID-19. Over the past weekend (July 31 to August 2), sales at the three major department stores (Lotte, Shinsegae, Hyundai) all rose compared to the same period last year. ▲Lotte Department Store sales increased by 1.0%, ▲Shinsegae Department Store by 10.6%, and ▲Hyundai Department Store by 8.3% year-on-year.

The luxury market's boom is largely due to the influence of the Millennials, known as major luxury buyers. Until a few years ago, the main customers purchasing luxury goods were middle-aged people in their 40s and 50s with some economic means, but recently, consumption by customers in their 20s and 30s has surged, making them the new 'major luxury buyers.'

The luxury purchasing power of young people is also reflected in department store sales. According to Lotte Department Store, in the first half of this year, luxury sales growth rates for those under 20 and those in their 30s were 25.7% and 34.8%, respectively, significantly higher than those in their 40s (13.7%) and 50s (10.5%) during the same period. At Shinsegae Department Store, luxury sales growth for the 20s and 30s age group was 30.1%, up from 20.3% last year.

On the morning of June 26, a customer was looking at luxury bags at the duty-free luxury goods store in Lotte Department Store, Seo-gu, Daejeon. [Image source=Yonhap News]

College student Lee (25) also recently started a part-time job to buy luxury goods.

Lee said, "I'm saving my part-time wages to buy luxury shoes. When I look at my acquaintances' SNS these days, I see a lot of luxury wallets, watches, and bags. If everyone else has them and I don't, I feel left behind." She added, "I'm not going to be rich anyway, so I'm trying to find happiness I can enjoy now."

Luxury items purchased like this are sometimes used as a means of 'self-display' among young people. Searching hashtags like 'flex' or 'I flexed, didn't I?' on Instagram yields about 250,000 posts. Especially, some netizens actively seek information about luxury products by asking questions in the comments when posts about luxury goods are uploaded.

However, there are concerns that if luxury consumption spreads like a trend among economically vulnerable young people, it could lead to overspending.

Office worker Kim (28) said, "The 'flex phenomenon' is something far from me," "I don't understand how people can spend money recklessly without knowing what the future holds." He added, "It's already tight to pay rent and living expenses, so if I buy luxury goods just to follow trends, I won't have money to save."

Recently, luxury consumption has been increasing among the 2030 generation. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

Given this situation, the number of young people unable to pay their credit card bills on time is increasing. The revolving credit balance, a service where only the minimum payment is made on the scheduled payment date and the remaining balance is carried over as a loan, has nearly doubled among people in their 20s over the past three years, recording the highest growth rate among all age groups.

According to data on 'revolving credit balances of the four major credit card companies (Shinhan, Samsung, Hyundai, KB Card)' received by Jang Hye-young, a member of the National Assembly's Planning and Finance Committee from the Financial Supervisory Service, the balance for those in their 20s was 33.2 billion won in May, an 87.0% increase from 17.8 billion won in May 2017, three years earlier.

The increase rate in the 20s was the steepest among all age groups. Following the 20s were those aged 60 and over (28.5%), 30s (16.6%), 40s (13.1%), and 50s (11.0%). The overall revolving credit balance growth rate was 17.8%.

Experts analyze that the 'flex phenomenon' stems from a conformity behavior of imitating others.

Professor Kwak Geumju of Seoul National University's Department of Psychology explained, "After seeing people they like or celebrities overspend on YouTube and SNS, consumers may imitate by buying similar products. This is because they want to belong to the same group and have a desire to imitate others. Such conformity psychology creates trends."