Skip and splurge: Millenials’ spending strategy
Han Seong-cheol, a 34-year-old office worker in Gwanghwamun ate packed lunches either brought from home or purchased at nearby convenience stores for the entire month of January.
His goal was to cut back on expenses made at lunch, to no more than 20,000 at restaurants around Gwanghwamun.
After living like that for a month, Han went to the three-star Michelin restaurant La Yeon at the Hotel Shilla for lunch with his girlfriend.
There, a Korean lunch course costs up to 170,000 won per person, which is 20 times more than what he spent on lunch in the past month.
“I was satisfied with the luxurious lunch course especially since a lot of people showed their envy when I posted it on my [social media] account,” he said.
A college student surnamed Jung is not as enthusiastic about spending money on big meals. Instead, she finds joy in an extravagant dessert at dessert cafes in Seoul’s most trendy neighborhoods. She even skips meals to fully enjoy a dessert she has been coveting on Instagram for days.
“I always think I have to cut back on my daily spending so I try to eat little for both lunch and dinner. Sometimes I share one menu with my friend,” Jung said.
“But when I come across pretty and extravagant desserts, I don’t hesitate to spend 10,000 won to even 50,000 won for it. I have a limited amount of money but I find more satisfaction both eating and looking at the dessert than proper meals,” she said.
Living economically in most parts of life but splurging big on another is common for Koreans who are in their 20s and 30s.
“They are usually very picky in gauging products’ cost-effectiveness in their ordinary lives,” said Lee Kyung-hee, head of a research lab at Shinsegae Group. “But to refresh oneself, they tend to visit a very expensive restaurant or buy luxury goods once in a while. Certain behavior is especially obvious for those who are young.”
Consumer sentiment has been nose-diving in recent months as the nation’s unemployment rate has skyrocketed.
But according to Hyundai Department Store, sales of luxury watches have soared 43 percent year-on-year in 2016. In 2012, the rate grew just 8 percent.
Lotte Department Store also said its luxury watch sales have risen 14 percent year-on-year in 2016. The growth has been led by 20-something consumers, as their rate of purchases soared by 32.8 percent year-on-year. Consumers in their 30s’ purchases increased by 24 percent in 2016 compared to the previous year.
Sales of imported clothing brands also rose by 12.5 percent among those in their 20s in 2016, surpassing the average rate of 8.6 percent.
A similar trend is spotted in the tourism industry as well. Domestic tours have shrunk while overseas groups have risen.
According to Lotte Home Shopping, sales of overseas package tours rose by 50.8 percent in 2015 year on year. Domestic tours weren’t even on the list of sales items because of poor demand. CJ O Shopping, a home-shopping subsidiary of CJ Group, said domestic tours accounted for 11 percent in 2014, but shrank to 2 percent last year.
“The tendency for overseas tours used to start at affordable and close locations in Southeast Asia in the past,” said one spokesperson at Lotte Home Shopping. “But these days, the most popular product is the European countries’ product,” he said.
Analysts say it’s because 20- and 30-something have less money to spare for big-ticket items.
According to Statistics Korea, consumption expenditures made by those younger than 40 rose by 2.6 percent over the past five years as of the third quarters in 2016.
In contrast, expenditure made on housing, encompassing house prices and utility bills for the same demographic, rose by 26.5 percent year-on-year.
BY CHOI HYUN-JOO, JIN EUN-SOO [firstname.lastname@example.org]