Search

    ASIA
    ECONOMY | Staff Reporter, Korea
    Published: 18 May 12
    742 views


    Korea's department stores suffer biggest decline in 3 years

    Store sales fell by 3.4% as both luxury goods and discount products experience a drop in consumer purchases, by 5.9% and 2.4% respectively.

    Growth momentum of luxury goods sales has started to weaken after the previous economic recovery. In 1Q12, luxury goods sales rose only 6.9% and then dropped in April.

    The weakening trend in department store saleswas caused by the negative wealth effect and tightened consumer credit. 

    Here's more from the research by Morgan Stanley:

    Korea's department store sales declined 3.4% YoY in April compared to the gain of 1.6% in March. It was the biggest decline in almost three years if January is to be excluded, which was affected by the Lunar New Year holidays. In particular, luxury goods sales declined 5.9% YoY in April, the first decline in two years. Discount store sales were also weak, down 2.4% YoY in April compared to the gain of 3.2% in March.

    Weakening Growth Momentum of Luxury Goods Sales

    Luxury goods sales were once a major driver for department store sales. In 2011, luxury goods sales jumped 20.7%, after showing strong growth of 11.3% in 2010 and 16.7% in 2009. It was far higher than the average growth of department store sales at 8.4% in 2009-11.

    The strong sales of luxury goods were powered by the solid economic recovery after the global financial crisis, which benefited the higher-income households more than the lower-income households. However, the growth momentum of luxury goods sales has started to weaken. In 1Q12, luxury goods sales rose only 6.9%, and they showed a decline of 5.9% in April.

    Negative Wealth Effect and Tightened Credit Affecting Consumption

    The weakening trend in department store sales, luxury goods sales in particular, was caused by the negative wealth effect and tightened consumer credit. In March and April, Kospi declined 0.8 % and 1.6% respectively, as inventors again turned bearish over the economic recovery outlook.

    Meanwhile, Korea's property market remained stagnant, and the property price in Seoul has been declining for 11 consecutive months. Banks also tightened consumer loans as government was becoming cautious about high household debt in Korea. The average growth of household loans decelerated to 4.7% YoY in 1Q12 compared to 5.9% growth in 2011.  



    Sign up for our newsletter

     

    Do you know more about this story? Contact us anonymously through this link.

    Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

    To get a media kit and information on advertising or sponsoring click here.

    Tags: Korea, consumer, department store, sales, luxury, discount, items

    LATEST ECONOMY JOBS »
    • No jobs posted on this category.
      PRINT ISSUE »

      Subscribe Now
      Cash-flush tourists in HK

      193 views

      Is Central Hong Kong a ghost town in the making?

      310 views

      As goes Singapore, so goes Hong Kong?

      260 views

      MOST READ EXCLUSIVES

      Hong Kong’s 6 hot new restaurants in August

      Hong Kong’s 6 hot new restaurants in August

      Warm your belly with these top picks.

      by KRISANA GALLEZO
      5 Sep 2014 | 3610 views
       

      Hong Kong’s 5 hot new restaurants in September

      Hong Kong’s 5 hot new restaurants in September

      More international brands made their way into Hong Kong’s F&B industry.

      by KRISANA GALLEZO
      20 Oct 2014 | 1420 views

      Check out BASF’s new environment-friendly headquarters

      Check out BASF’s new environment-friendly headquarters

      The company cuts 50% of its electricity consumption every month through LED lighting.

      by KRISANA GALLEZO
      29 Sep 2014 | 1255 views
       

      Check out HK’s first dining-in-the-dark restaurant

      Check out HK’s first dining-in-the-dark restaurant

      Experience an actual blind date at the Alchemy in the Dark.

      by KRISANA GALLEZO
      10 Oct 2014 | 1230 views

      Take a tour at Hong Kong’s first modern French restaurant

      Take a tour at Hong Kong’s first modern French restaurant

      And, get to know the three-Michelin-starred Chef behind its creation.

      by KRISANA GALLEZO
      23 Sep 2014 | 970 views
       

      The Langham Hong Kong completes US$30 million refurbishment

      The Langham Hong Kong completes US$30 million refurbishment

      Check out the new London-style suites and its award-winning Artesian Bar.

      by KRISANA GALLEZO
      27 Oct 2014 | 806 views

      Here’s a Facebook-like neighborhood social network just for Hong Kong

      Here’s a Facebook-like neighborhood social network just for Hong Kong

      Do you want to make sure that the person you are sharing the lift with is a neighbor and not a stranger?

      by KRISANA GALLEZO
      3 Sep 2014 | 746 views
       

      Franck Muller opens a Maison for luxury and cravings

      Franck Muller opens a Maison for luxury and cravings

      Its flagship store in HK comes with two new gourmet restaurants.

      by KRISANA GALLEZO
      27 Aug 2014 | 743 views

      Do you want to build a killer app?

      Do you want to build a killer app?

      Altitude Labs will make your ideas happen – Silicon Valley-style.

      by KRISANA GALLEZO
      9 Oct 2014 | 563 views
       

      Are you ready for Italian mania? Jamie’s Italian finally hits Hong Kong

      Are you ready for Italian mania? Jamie’s Italian finally hits Hong Kong

      The new outlet features a bold graffiti mural by the founder’s long-time pal.

      by KRISANA GALLEZO
      3 Nov 2014 | 542 views

      Having trouble finding the right gift? Call your BUTLUR

      Having trouble finding the right gift? Call your BUTLUR

      A former internationally ranked junior tennis player founded this company.

      by KRISANA GALLEZO
      11 Sep 2014 | 392 views
       
      close Don't Show Again

      STAY INFORMED! Get our free weekly newsletter