Korea Retail

Asian Cities

1H 2016

 

The consumer sentiment index, which fell below 100 in the wake of the MERS outbreak, recovered to 100 in January 2016. However, household consumption has remained sluggish amidst slow economic growth, the high level of household debt which reached KRW 1,200 trillion (84% of GDP), and the increase in pension and insurance premiums and taxes, as well as rising unemployment for those in their 20s and early 30s. The expenditure-to-income ratio declined from 77% in 2010 to 72% in 2015, showing a conservative spending pattern as the household economy directly affects consumption patterns.

Department store sales have decreased but the average purchase amount of VIP customers increased, revealing a polarisation in consumption. The factors behind this decrease in department store sales are economic recession, change in consumption patterns, increase in direct purchases from overseas Internet sites, market saturation and competition with outlet stores. Department stores have strived to improve their drawing power through premium grocery section launches and the expansion of trendy F&B brands and multi-brand fashion shops. In addition, to offer further convenience to customers, department stores have reinforced omni-channel systems, which integrate online and offline stores for shopping.

 
 

Key contacts

Simon Smith

Simon Smith

Senior Director
Research & Consultancy

kamaco Two Exchange Square

+852 2842 4573

 

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