'Young and Rich' Sales Share Nears Half... Department Stores' Strategic 'MZ Marketing'

30-40% of Department Store Sales from 2030 Generation... Over Half at Some Stores
Paid Memberships, Exclusive Cards, Private Lounges... "Stylish Yet Practical"

A member of Lotte Department Store's 'Y Community' is using the VIP bar located on the 4th floor of the main store.

[Asia Economy Reporter Kim Yuri] The department store industry is expanding marketing efforts to attract the MZ generation (Millennials + Generation Z) "big spenders." The methods are evolving, ranging from paid membership services offering hotel afternoon tea sets to exclusive card services. Industry insiders agree that MZ-targeted marketing has become a necessity rather than a choice, as the sales proportion of the rapidly growing 20s and 30s customer segment approaches half.

According to the distribution industry on the 16th, as of the end of last year, the sales proportion of customers in their 20s and 30s at the three major department stores?Lotte, Shinsegae, and Hyundai Department Store?was around 35-43%. Lotte Department Store recorded 35.9%, Shinsegae Department Store 41.2%, and Hyundai Department Store 43.4%. The 2030 sales proportion at "The Hyundai Seoul," which opened in February last year branding itself as the "playground for the MZ generation," exceeded half at 50.3% in its first year. This trend has continued into this year. From January to May this year, the sales growth rate of the 2030 generation also showed an increase of 20%, 31.7%, and 20.1% respectively compared to the same period last year, maintaining a 20-30% growth rate.

The industry is focusing on targeted marketing that can capture these "young and rich" consumers as loyal customers across various channels by understanding their consumption patterns. The key is to "properly showcase while ensuring practical benefits." For those who frequently use the term "Instagrammable" and actively utilize social networking services (SNS), they offer stylish places and products that are visually appealing, along with practical benefits such as valet parking, department store product discounts, and linked product discounts and rewards.

Lotte Department Store recently surpassed 2,000 cumulative members for its service "Y Community," which reflects these trends. Y Community, a paid membership for those aged 20-35 operating at the Jamsil and main branches, is popular for its concept of "paying 100,000 KRW and receiving welcome gifts worth 100,000 KRW, along with VIP-level benefits." The welcome gifts include items reflecting MZ generation tastes such as a "hotel afternoon tea set" and "niche perfumes." Members also receive two 10% discount coupons monthly, free parking, valet parking, and free drinks at the "VIP Bar" for VIP customers at each branch. After a pilot operation last year, the official launch at Jamsil branch in January and expansion to the main branch in March received great responses, leading to the recent recruitment for the second term.

Shinsegae Department Store, which introduced the VIP Red grade for customers spending over 4 million KRW since 2017 to lower the entry hurdle for VIP status and attract the MZ generation, is now collaborating with card companies to expand MZ loyalty. Starting today, Shinsegae Department Store is launching five co-branded cards with BC Card that offer customized benefits for MZ generation customers. When registering with simple payment methods such as SSG Pay, the highest discount rate (7%) among Shinsegae Department Store co-branded cards is provided. Customers can also receive up to 30,000 KRW in monthly billing discounts.

Hyundai Department Store is also actively expanding "Club YP" this year. As of this year, only those aged 39 or younger (born in 1984 or later) can join Club YP. Customers who have spent over 30 million KRW or have outstanding records in donations or volunteer activities can use VIP-only lounges at The Hyundai Seoul and Pangyo branches, and receive services such as valet parking and six-month interest-free installments on luxury purchases. A distribution industry official said, "As the purchasing power of the 2030 generation increases, each department store is strengthening and offering services with various benefits targeting the lifestyles of this core customer group," adding, "Competition to secure young loyal customers will intensify."