What: Shinsegae, Lotte and Hyundai are all able to post modest growth in a very difficult context.

Why it is important: Middle-class consumption remains the last hope for retailers in markets where inflation remains high

Despite an economic downturn marked by high interest rates and rising prices, large department stores in Korea, including Lotte Shopping, Shinsegae, and Hyundai Department Store, have shown robust sales growth. In the first quarter, combined sales reached 2.733 trillion won, a 3.8% increase from the previous year's 1.9983 trillion won. Each of the three major retailers recorded sales increases, with Lotte Department Store at 1.4%, Shinsegae Department Store at 7.0%, and Hyundai Department Store at 3.6%. Notably, all three stores achieved record-breaking performance for the quarter, with Lotte and Shinsegae seeing the highest transaction volumes ever for this period, and Hyundai Department Store reaching a new quarterly sales record.

These results underscore the resilience of middle-class consumption despite broader economic pressures. An official from Hyundai Department Store attributed their success to strong sales in luxury goods, young fashion, and sports products, particularly in their Pangyo branch and The Hyundai Seoul.

The growth in department store sales contrasts with increasing economic strain on the general populace, evidenced by rising costs for groceries and dining out. Analysts have cautiously noted signs of a rebound in domestic consumption, which grew by 0.8% in the first quarter, suggesting that consumer spending might have reached a low point. Researchers attribute this recovery to factors including a continuous trade surplus, rising asset values in markets like bitcoin and stocks, and increased foreign consumption, signaling a possible stabilization in economic conditions despite ongoing challenges.

South Korean department stores beat the inflation