Retailers are selling more bling than bags
Korea's mania for designer handbags hasn't ended, but attention is shifting to another category of luxury goods: high-end watches and jewelry.
The bag mania has been well documented. In the past few years, people have camped out overnight in front of luxury retail stores such as Chanel to snap up bags before prices were hiked. They bought from resellers at gouge-worthy prices if necessary.
Big spenders now consider bags less than impressive. Watches and jewelry are the way to make themselves stand out.
“Chanel bags have become somewhat common these days,” sniffs one 39-year-old VIP customer of a department store in Seoul, mentioning the hoi polloi who camped out overnight in front of stores. “I started looking into jewelry instead and buying it to show I'm different."
Designer watches and jewelry accounted for 22 percent of total spending by VIP customers in the first half of the year at Galleria Department Store, according to the store on Tuesday. VIP customers spend over 20 million won ($15,170) a year.
VVIP customers, who spend over 100 million won a year, are really leading the trend. Their purchases of designer watches and jewelry rose by 76 percent in the first half of 2022 compared to the previous year.
Around 31 percent of purchases by VVIP customers were of designer watches and jewelry, almost double the proportion for all customers.
Since 2018, Galleria has been offering a service bringing choice pieces of merchandise to big-spenders' homes to see if they want to buy them. It calls it its personal consulting service.
That service is going strong. "We never take high-end jewelry items out of the store,” said a spokesperson for Galleria Department Store, "but we are making an exception for VIP and PSR customers [Galleria's term for VVIPs]."
“Special VIP programs drove sales," said the spokesman.
In April, Galleria kicked off a priority pass service for high-spending customers allowing them to enter high-end stores such as Cartier, Bulgari, Louis Vuitton and Dior without having to wait on any queue.
Galleria is also planning to introduce more designer watch and jewelry brands to its branches and host exhibitions and events for these brands every quarter.
Coming out of the pandemic, other department stores also saw surges in purchases by VIP customers in the first half of this year. Lotte Department Store’s VIP customers spent 30 percent more on overseas fashion brands between January and June, compared to the same period the previous year. Customers need to spend 18 million to 20 million won to become Lotte VIP customers. Purchases of golf products rose 40 percent on year and of athletic wear 35 percent.
To cater to rising demand from VIP customers, Lotte Department Store is gradually renovating its main branch in Jung District, central Seoul, with the help of British architect David Chipperfield. The retailer is planning to introduce more international designer brands.
In May, it also hosted an Avenuel Shopping Day, where only VIP customers could shop at the department store for the whole day.
“Covid-19 cases are surging again, but consumption by high-income consumers is unlikely to go down,” said a spokesperson from a retail store. “Department stores will actively make efforts to recruit VIP and VVIP customers through differentiated marketing strategies.”
BY BAEK IL-HYUN, CHO JUNG-WOO [firstname.lastname@example.org]