Department Store VIP Benefits Selected According to Lifestyle and Preferences

Breaking Away from Uniform Benefits by Grade
Selective System 'Pinset Marketing'
Preventing Existing 'Big Spenders' from Leaving
Attracting New MZ Generation Customers

[Asia Economy Reporter Jeon Jin-young] The department store industry is launching ‘pinpoint marketing’ targeting VIP customers. Moving away from the existing system that uniformly distributed benefits according to grade, they are introducing benefits aimed at various customer preferences and lifestyles to prevent the defection of ‘big spenders’ and attract new MZ generation (Millennials + Generation Z) customers.

According to the industry on the 22nd, Lotte Department Store introduced a ‘selective benefit’ system this year for the MVG ACE grade (annual spending of 18 to 20 million KRW or more). In the existing system, benefits were fixed by grade, but this system allows customers to choose benefits that suit their shopping and lifestyle. For example, if customers choose the ‘shopping type,’ lounge benefits decrease but discount benefits increase; if they choose the ‘life type,’ shopping benefits decrease but cultural benefits are enhanced. Cultural benefits include membership perks for Lotte Concert Hall and Seoul Arts Center, online video streaming services (OTT), and subscription services for wine and coffee.

Shinsegae Department Store has been offering the industry’s first fruit subscription service for VIPs since May 2020. For a monthly subscription fee of 100,000 KRW, buyers personally select seasonal fruits and deliver them every two weeks. This service has become popular, with the number of applicants this year increasing more than tenfold compared to the same period last year.

Hyundai Department Store provides VIP customers with a ‘book curating regular delivery’ service, where experts from various fields such as politics, society, and culture personally recommend books and send them to customers’ homes. They also offer regular delivery services for air-purifying plants, orchids, and flowers. They are particularly focusing on VIPs in their 20s and 30s. As the first in the department store industry to launch a VIP membership exclusively for the 20s and 30s called ‘Club YP,’ the number of customers in their 20s and 30s increased by 86.7% and 54.2%, respectively, compared to the previous year. Their sales proportion also reached 43.4%.

Galleria Department Store started subscription services for wine, art, pets, and healthcare for VIPs from the day before yesterday. For the wine subscription service, the Galleria wine buyer personally selects the ‘wine of the month,’ delivering one bottle each month for three months. The art subscription service rents paintings that customers want, the pet subscription service provides pet toys and snacks, and the healthcare subscription service delivers health functional foods tailored to customers after consultation.

Department stores are engaging in pinpoint marketing to prevent the defection of big spenders through detailed services targeting customer preferences at a time when ‘revenge consumption’ has intensified in the third year of COVID-19. In fact, VIP customer sales have been increasing every year. Last year, Galleria Department Store’s VIP sales increased by 41% compared to the previous year. The proportion of VIP sales in total sales also reached 45%.

An industry official said, "Beyond fixed benefits such as lounge use and valet parking, each department store is trying to differentiate itself by providing various services that reflect customer preferences."

Professor Lee Eun-hee of Inha University’s Department of Consumer Studies analyzed this marketing trend, saying, "Recently, customer management services are shifting to individualized types. The most important element of customer management is to allow customers to choose what they want. From the customer’s perspective, receiving services through individualized customization strategies makes them feel special."