Department stores are enjoying a boom thanks to foreign tourists who come to Korea to buy luxury goods. Shinsegae Department Store, Lotte Department Store (Lotte Shopping), and Hyundai Department Store each reported record first-quarter results. The retail industry says foreign tourists are visiting department stores and spending on luxury goods, jewelry, and high-end fashion.
On the 12th, according to Shinsegae, Shinsegae Department Store posted first-quarter net sales of 740.9 billion won and operating profit of 141 billion won. Sales and operating profit rose 12.4% and 30.7%, respectively, from a year earlier. Buoyed by the boom in the core department store business, Shinsegae's sales and operating profit hit all-time first-quarter highs.
Sales to foreign consumers visiting Korea rose noticeably. At the Seoul Jung-gu main store of Shinsegae, sales to foreign consumers jumped 140% from a year earlier. Even across all department store locations, sales to foreigners roughly doubled.
Lotte Department Store and Hyundai Department Store, which released results earlier, showed a similar trend. According to Lotte Shopping, Lotte Department Store posted first-quarter net sales of 872.3 billion won and operating profit of 191.2 billion won. Those figures were up 8.2% and 47.1% from the same period last year. Hyundai Department Store's first-quarter net sales were 632.5 billion won, up 7.4% year over year, and operating profit for the same period climbed 39.7% to 135.8 billion won.
The three department store companies say the sales boost from the influx of foreign tourists is larger than expected. As recently as early this year, the view was that foreign spending would make up only a limited share of total sales. But the results beat expectations. The analysis is that foreign tourists mainly bought high-margin items at department stores, such as luxury goods, jewelry, and high-end apparel.
An industry official said, "Some tourists are trying to benefit from a price-cut effect from exchange rates (a weaker won), and some are turning to luxury counters because goods are relatively easier to get in Korea." Preference was also high for "K-fashion," which K-pop idols often wear. A department store official said, "The unit amount that foreign tourists spend at department stores has risen compared with the past."
Going forward, the three department store companies plan to actively expand digital and interpretation services to improve shopping convenience for foreign tourists and to boost the fun of shopping through content to keep them coming. A department store official said, "In the second quarter, the department store segment is expected to continue growth as sales across all categories, including high-margin fashion, keep expanding."