SEOUL, Oct. 19 (Korea Bizwire) — Despite the prolonged economic recession resulting from the outbreak of the COVID-19 pandemic, sales of luxury items have marked a sharp increase.
According to the Ministry of Trade, Industry and Energy, sales of luxury items at the nation’s major department stores were up 9.2 percent year on year in the first half of this year.
In particular, sales of luxury items at Shinsegae Department Store in July registered a robust year on year growth of 49.4 percent, boosting overall sales at department stores which remained stagnant amid the pandemic.
On the back of the increasing demand for luxury items, a string of luxury brands such as Gucci and Chanel are pushing up their product prices.
Market watchers said that the primary reason behind the surge in the sales of luxury items at department stores despite the national social distancing campaign is so-called ‘revenge spending.’
Consumer stress that has been piled up for various reasons, including the difficulty in going on overseas trips since the outbreak of the COVID-19 pandemic, is leading to an increase in the consumption of luxury items as a way to relieve the stress.
On the other hand, however, concerns are growing about whether the pandemic is deepening consumption polarization that has been identified as a social problem.
“In South Korea, the size of the middle-income class is declining, while the low-income class with an income less than 50 percent of the median income and the high-income class with income more than 150 percent of the median income are both growing in size,” said Seo Yong-gu, a professor of business administration at Sookmyung Women’s University.
“Accordingly, the absolute number of people with a high enough disposable income to buy luxury items is actually increasing.”
Some say the increase in sales of luxury items could contribute to the recovery of overall consumption sentiment, which has been subdued in recent months.
However, Seo stressed, “The luxury market is different from the mass market. It’s difficult to view the growth of the luxury market as a preceding variable that indicates the recovery of the overall consumption market.”
J. S. Shin (firstname.lastname@example.org)