South Korean department stores delivered 30 trillion won (US$26.4 billion) in combined sales last year, up 2.3 percent from a year ago, breaking out of years of stagnancy, according to industry sources.
It took them nine years to break the new revenue milestone since their combined sales exceeded 20 trillion won. The retailers saw a rapid growth in revenue until the early 2000s but then faced slow sales due to economic slowdown and changing consumer preferences on top of stricter distribution regulations.
Their combined sales stayed stagnant over the past six years – 29.1 trillion won in 2012, 29.8 trillion won in 2013, 29.3 trillion won in 2014, 29.2 trillion won in 2015, 29.9 trillion won in 2016, and 29.3 trillion won in 2017.
Market experts expected a bumper year in 2016 due to rapid expansion of Shinsegae Department Store. But consumer sentiment soured in the latter half as the country grappled with unprecedented power abuse scandal that led to impeachment of the former president Park Geun-hye.
Last year’s sales growth was largely driven by robust demand for expensive home appliances like air purifier amid worsening air pollution and brisk sales of luxury goods by high-income households, according to sources. The return of big-spending Chinese tourists to Korea also helped business.
A series of closedown of some cash-strapped outlets by big three names – Lotte, Hyundai and Shinsegae – did not affect overall performance.