Fired-Up Revenge Spending... Will Shopping Stocks See Sunshine Too?

April Retail Sales Index Hits Record High
Primarily Driven by Increases in Apparel and Cosmetics
Consumer Sentiment Surges Amid COVID-19 Vaccinations and Outdoor Activities Increase

On the 16th of last month, when it rained nationwide, a department store in downtown Seoul was bustling with shoppers. Weekend crowds flocked to indoor facilities such as department stores to avoid the rain. On that day, the Central Disease Control Headquarters announced that there were 610 new confirmed COVID-19 cases, bringing the total to 131,671. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] As consumer sentiment, suppressed by COVID-19, begins to surge, attention is focusing on consumer-related stocks such as department stores.

According to Statistics Korea on the 1st, the retail sales index for April, announced the previous day, recorded 120.5 on a seasonally adjusted basis. This is the highest level since statistics began in 1995. It increased by 2.3% compared to the previous month, showing a two-month consecutive rise. By category, non-durables such as cosmetics rose 2.4%, semi-durables such as clothing increased 4.3%, and durables such as communication devices and computers went up 0.7% respectively.

The retail sales index surveys monthly sales amounts at department stores, large discount stores, supermarkets, and specialty retail stores. Since it reflects actual sales to final consumers, it is considered to reveal real consumption trends. Accordingly, there is an analysis that ‘revenge consumption’ suppressed by COVID-19 has begun in earnest. Eounseon Uh, Director of Economic Trend Statistics at Statistics Korea, explained, "This appears to be due to the continued effect of easing social distancing, expanded COVID-19 vaccination, and increased outdoor activities due to warmer weather," adding, "Consumer sentiment is improving, and various consumption policies are supporting consumer confidence."

Thanks to this, consumer-related stocks such as department stores are gaining attention. Shinsegae recorded an intraday high of 327,500 KRW the previous day, setting a 52-week high. Hyundai Department Store also closed up 3.67% the previous day. As of 10:04 AM on the day, they showed flat and -0.64% respectively, showing some hesitation, but expectations are projected to rise later. Lotte Shopping recorded 122,500 KRW at 10:04 AM, up 0.82% from the previous day. It has risen about 10% over seven consecutive trading days since the 24th of last month.

This is interpreted as a combined effect of expanding luxury consumption trends and revenge consumption in the department store sector, along with expectations for improvement in the duty-free shop sector. Suyeon Lim, a researcher at Hi Investment & Securities, said, "Revenge consumption is beginning in earnest due to the start of COVID-19 vaccination and seasonal factors," and predicted, "With COVID-19 vaccination this year, quarantine measures will be significantly eased, and offline consumption demand will surge due to compensatory psychology."