Foreign VIP customers boost Korean department stores' sales

Wei Liu, a 41-year-old Taiwanese businessman, snapped up 300 million won ($220,000) worth of luxury brand products at Hyundai Department Store’s Trade Center branch in southern Seoul late last month.

He often comes to Korea for business and stays in accommodation near the Convention and Exhibition Center (COEX). During his stays, he enjoys shopping at the department store connected to the trade center.

Hyundai Department Store’s Trade Center has more than 500 foreign VIP customers like Wei who regularly spend more than 10 million won a visit

Thanks to an increase in foreign shoppers, South Korea’s top three department stores posted brisk sales growth in the first four months of this year.

Hyundai Department Store saw a 205% surge in sales in the January-April period from the same period last year. Shinsegae Department Store and Lotte Department Store logged sales growth of 137% and 60%, respectively.

For Hyundai Department Store’s Trade Center, sales to foreign customers jumped 13.1% on-year in the January-April period, compared with a 12.1% growth in 2023 and a 4.2% rise in 2022.

It recently expanded the lineup of premium brands popular among foreigners.

“We have never imagined that foreigners would account for over 10% of sales in a core store where mainly Koreans purchase luxury goods,” said a department store official in Seoul, “It means that foreigners have emerged as a VIP customer group that we need to specially manage and continuously market.”

To attract foreign regulars beyond duty-free items to department store products, Korean department stores have introduced loyalty programs exclusive for foreigners, including reward points. Hyundai Department Store has more than 30,000 foreigners registered to earn its reward points.

Of its stores, Hyundai Department Store Apgujeong is the most visited branch by foreign luxury goods shoppers. It runs makeup and styling beauty classes tailored to foreign customers.

“Foreigners buy a lot of beauty-related products at the Apgujeong branch, surrounded by plastic surgery clinics," said a Hyundai Department Store official.

Luxury beauty and products make up 12.8% of foreign customers’ purchases at the Apgujeong branch, more than twice as much as that of its other branches.

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Write to Ji-Yoon Yang at yang@hankyung.com

Yeonhee Kim edited this article.