"Dear Customer, You Need to Spend 200 Million Won Annually" ... Department Stores Raise VIP Criteria

Lotte Department Store MVG Avenue Sales Reach 230 Million KRW This Year
Shinsegae Trinity Standard Expected to Rise to 240 Million KRW
Luxury Consumption Grows Amid Travel Restrictions... New VIP Members Also Increasing

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Despite the prolonged COVID-19 pandemic, department store sales have reached record highs amid a 'revenge consumption' boom, leading to a sharp increase in the purchase performance (purchase amount) criteria to become a VIP customer at department stores. With overseas travel and duty-free shopping restricted, the number of customers buying luxury goods at department stores has significantly increased, and the number of new VIP members is expected to rise as well.

You Need to Spend 200 Million KRW to Become a VVIP

According to the distribution industry on the 7th, the annual purchase performance of customers selected as MVG 'Avenuel,' the highest tier VIP at Lotte Department Store this year, has risen to about 230 million KRW. Lotte typically determines department store VIP status based on performance from December of the previous year to November of the following year. Compared to the approximately 180 million KRW required to qualify for the Avenuel tier last year, this year's threshold has increased by 40 to 50 million KRW.

Including Avenuel, the number of MVG customers at Lotte Department Store who purchase at least 18 million KRW annually?covering tiers such as Renis, Prestige, Crown, and Ace?has increased by about 20% compared to last year. A Lotte representative explained, "MVG members, who account for 0.6% of all customers last year, contributed to 15% of total sales."

The highest VIP tier at Shinsegae Department Store, 'Trinity,' is also expected to see its qualification criteria rise from the high 100 million KRW range last year to around 240 million KRW this year. The department store stated, "For Trinity, not only purchase amount but also purchase frequency and product categories are considered, and it is granted to only the top 999 customers, so detailed criteria cannot be disclosed." However, among existing VIPs, the consensus is that "you will need to spend at least 50 million KRW more than last year." Trinity customers for this year will be decided in early February.

Hyundai Department Store has decided to apply a new standard from next year, limiting the highest tier, Jasmine Black, to customers who purchase at least 120 million KRW annually. Hyundai has not previously disclosed the purchase performance criteria for Jasmine Black members, but this year it is known that customers with sales of 80 to 90 million KRW qualified.

Hyundai Department Store previously recognized only one-fifth of the performance (mileage) for payments made with cards other than its own, but now it will reflect performance regardless of payment method. Purchases made on the online mall 'The Hyundai.com' are also included in VIP qualification performance. In particular, for purchases from about 70 luxury brands rather than general fashion categories, a reward system is applied that returns 1.5% of the purchase amount as gift certificates.

Fierce Competition to Attract VIPs

The rise in VIP selection criteria at department stores is related to the intensified preference for high-priced luxury goods since the spread of COVID-19. While total sales of the three major department stores (57 stores) decreased by 9.8% year-on-year in 2020, luxury goods sales increased by 15.1%. Last year, sales at the five major domestic department stores (70 stores) grew by more than 20% year-on-year, with luxury goods sales estimated to have increased by about 30 to 40%.

A department store official said, "Due to the impact of COVID-19, overseas travel was blocked and duty-free store usage was restricted, which increased luxury consumption among VIP customers. Especially, the highest-tier customers expanded their spending more significantly."

Customers have pointed out that while benefits continue to decrease, the tier criteria keep rising. One department store VIP customer complained, "During COVID, exclusive lounge refreshments were unavailable for a while, and VIP invitation cultural events like concerts were drastically reduced, but I still had to spend tens of millions of KRW more annually to maintain my tier, and the benefits are not as good as before, so it feels like a waste."