Customer satisfaction with Via Shinsegae, a travel program that Shinsegae Department Store launched in August, appears to be high. On the 14th, Via Shinsegae tallied its repurchase rate and found it to be around 25%. The travel industry regards this as a meaningful number. That is because the repurchase rate applies not to mass-market packages tailored to popular taste, but to ultra-high-end premium packages.
Shinsegae Department Store is steadily increasing the number of travel programs. The package prices are higher than those offered by ordinary travel agencies. The 2-night, 3-day Andong gastronomy trip is sold at around 3 million won. A 10-day trip to Rome, Italy, with Hongik University architecture professor Yoo Hyun-jun is around 35 million won, and a 14-day program to Peru and Brazil is about 60 million won.
Shinsegae Department Store believes the strong repurchase rate stems from the fact that all travel package purchases count toward department store VIP qualification. Shinsegae Department Store selects VIPs based on high annual spending. There are seven VIP tiers in total. The lowest tier, Red (RED), requires spending at least 5 million won across 24 visits in a year, while the highest tier, Trinity (TRINITY), is relative. It is granted only to the 999 people who spend the most in a year.
A distribution industry official said, "There are more consumers than expected who want to maintain the same VIP tier as in previous years, and most of them tend to step up spending around the second half of the year to hit their targets," adding, "It seems there is also a mindset of choosing to take a trip rather than buying things they do not need."
High satisfaction with the travel programs is also cited as a reason for the strong repurchase rate. Because the products are sold at relatively high prices, the company focused on program design to maximize customer satisfaction. The programs are built around five-star hotels or unique lodgings with comparable service, and they cover content that ordinary travel agencies find hard to handle. On top of that, the guides' expertise has been strengthened to make the trips more enjoyable.
But an even bigger advantage is that responses to consumer complaints are swift and appropriate. This stems from the know-how accumulated in handling consumer complaints through the department store business. One customer who traveled with Via Shinsegae said, "When complaints arose about the accommodations during the trip, they focused on resolving customer dissatisfaction without prioritizing other areas such as the available budget," adding, "I liked that their approach to handling consumer complaints was different from that of ordinary travel agencies. It made me want to use them again."
The travel industry is keeping a close eye on Via Shinsegae's moves. This is quite different from the reaction a month ago. The reason is that the response has been stronger than expected in a market that Hanatour and Modetour Network have not captured. Travel agencies such as Hanatour and Modetour Network have been strengthening premium package products. As they cut down on shopping mall visits and removed optional tours, package prices have risen by as much as threefold. Prices for Europe routes in premium travel packages offered by ordinary agencies such as Hanatour and Modetour Network also easily exceed 10 million won.
However, it is difficult for them to match Via Shinsegae in quality control of travel products. That is because they must consolidate with local agencies and still generate revenue. By contrast, Via Shinsegae's programs are less about making money from the trips themselves and more about securing high-spending customers and keeping their spending within the ecosystem. A Shinsegae Department Store official said, "Rather than thinking about making money with Via Shinsegae, we are creating travel programs with the idea that it is enough to roughly break even and raise customer satisfaction."
A travel industry official said, "We thought it would be just a temporary operation of travel programs, but it seems to be filling gaps that ordinary travel agencies have not met," adding, "If this continues, it will likely become even harder to recruit customers for premium packages priced over 15 million won."