27 January 2025
The Weekly
South Korea

South Korea’s luxury department stores are increasingly reliant on high-spending VIP customers, with their contribution to total sales surpassing 50% at some retailers in 2024, reflecting a growing polarization in consumer behavior amid economic challenges. VIP customers accounted for 51% of sales at Galleria Department Store last year, up from 42% in 2020. Lotte Department Store and Shinsegae Department Store reported VIP contributions of 45%, while Hyundai Department Store followed at 43%. In response, department stores are raising spending thresholds for VIP status to secure affluent customers.

 

At Shinsegae, the ‘Diamond’ VIP tier now requires annual spending of ₩70mn (US$48.000), up from ₩60mn ($41.500) in 2024, while ‘Platinum’ rose from ₩40mn ($27.600) to ₩50mn ($34.500). Despite the higher benchmarks, Shinsegae’s VIP clientele grew by 3.7% last year. Hyundai Department Store similarly raised its top-tier ‘Jasmin Black’ threshold from ₩120mn ($83.000) to ₩150mn ($103.000), while Galleria increased its highest ‘PSR White’ tier requirement from ₩100mn ($69.000) to ₩120mn ($83.000). The competition among retailers to attract and retain VIP customers has intensified, with enhanced perks such as exclusive lounges, priority parking, and personalized shopping experiences. Some stores now offer VIP-only sections on their mobile apps, luxury events, and curated cultural experiences.

 

Shinsegae Department Store’s Gangnam branch became the first in South Korea to surpass ₩3tn (US$2bn) in annual sales last year, with its differentiated ‘VIP lounge’ services cited as a key factor. Hyundai held private parties at luxury hotels and offers regular delivery of premium plants and flowers to VIPs. Galleria’s top-tier customers receive unlimited discounts and access to exclusive events, such as yacht experiences during Seoul’s World Fireworks Festival. Amid the race to cater to high-spending customers, retailers are also tackling fraudulent receipt trading used to meet VIP criteria. Stores have tightened monitoring of purchase verifications and post-purchase validations to ensure the integrity of their loyalty programs.