Department Stores Thrive While Supermarkets Struggle: Widening Polarization in Consumption

[Anchor]

Driven by a surge in foreign tourists and a booming stock market, department stores in Korea are recording historic sales. However, looking at the retail industry as a whole, a polarization in consumption is emerging, with some sectors thriving while others struggle.

Reporter Sim Useop has the story.

[Reporter]

A duty-free shop inside a department store last weekend.

Cosmetic and clothing stores are packed with foreign tourists, including those from China.

The K-beauty craze and the weak Korean won have played a significant role.

[Yang Jiaye, Wu Shuying / Chinese Tourists: Usually, when we come to Korea, we buy cosmetics or skincare products, and they are definitely cheaper than in China. The shopping environment and purchasing experience in Korea are also quite good.]

Long lines of domestic customers have formed in front of luxury brand stores.

Stores selling watches and jewelry worth tens of millions of won are much busier than usual.

[Department Store Customer: I think more people are shopping because the stock market has gone up a lot. There are people around me who hold a lot of Samsung Electronics stock. And Hynix, too.]

The three major department store chains recorded their highest-ever sales in the first quarter, and sales in April also increased by more than 20% compared to a year ago.

In particular, sales of imported high-end brands and luxury goods surged by over 38%.

This is due to a combination of a sharp increase in foreign tourists, the so-called "wealth effect" from rising asset prices such as stocks, and increased income in the semiconductor industry.

However, not everyone in the retail industry is smiling.

Large discount stores and supermarkets, which are mainly used by ordinary households, are failing to escape a slump.

While the expansion of online shopping has had a major impact, analysts suggest that consumers are increasingly reducing the number and quantity of items they purchase due to the burden of inflation.

Some point out that the domestic demand recovery, driven by semiconductor-led economic growth and the stock market boom, is an illusion created by a "concentration on premium consumption."

[Cho Sang-hoon / Research Fellow at Shinhan Securities: In fact, department stores have a very strong nature of purposeful shopping, and it appears that the "wealth effect" has not yet led to a "trickle-down effect" that reaches general consumption at large supermarkets.]

There are also concerns that if the burden of household spending on daily necessities grows due to high inflation, and if instability in oil prices and exchange rates continues, consumer sentiment could shrink more rapidly in the second half of this year.

(Video Editing: Kim Jong-tae, VJ: Jeong Han-wook, Design: Seo Seung-hyun)
※ Please note: This article was translated by AI and may contain errors.