[Edaily Reporter SHIN MIN JOON ] As the domestic department store industry ushers in an era of annual sales to foreign customers exceeding 1 trillion won for the first time in history, it is focusing its efforts on attracting foreign VIP customers. This is because foreigners have emerged as a core consumer base for domestic department stores, and VIPs have higher purchasing power than general customers. The domestic department store industry is pursuing a strategy to expand its engagement with foreign VIP customers by building a lineup of top-tier brands and enhancing cashback benefits.

According to the department store industry on the 7th, #Lotte Department Store became the first in the domestic department store sector this year to surpass 1 trillion won in annual sales to foreign customers. Lotte Department Store announced that its cumulative sales to foreign customers exceeded 1 trillion won as of the morning of the 6th. Shinsegae Co.,Ltd and HYUNDAIDEPARTMENTSTORECO.,LTD have recorded cumulative sales of 850 billion won and 805 billion won, respectively, this year, and are expected to surpass 1 trillion won by the end of the year.

The domestic department store industry plans to continue breaking records by attracting high-spending foreign VIP customers. Shinsegae Co.,Ltd., which in May 2016 became the first in the domestic department store industry to introduce the Global VIP system—a separate VIP tier system for foreign customers—is strengthening its lineup of luxury brands alongside convenience services.

The Global VIP system is currently divided into three tiers: VIP (annual spending of 5 million won or more), VVIP (annual spending of 10 million won or more), and SVIP (annual spending of 30 million won or more). Shinsegae Co.,Ltd provides foreign VIPs with convenience services such as valet parking and annual gift vouchers worth a certain amount twice a year. It is also moving forward with plans to establish a dedicated lounge for foreign customers. In the second half of this year, the department store plans to expand its collaboration with major organizations—including the Korea Tourism Organization, the Seoul Tourism Foundation, and the Visit Korea Year Committee—to attract foreign customers.

Shinsegae Co.,Ltd is attracting foreign VIP customers through its top-tier luxury brand lineup. Last April, Shinsegae Co.,Ltd’s main branch renovated and opened Korea’s largest Chanel store at “The Heritage” within the main branch. In December of last year, it unveiled the world’s largest Louis Vuitton store at “The Reserve” within the main branch. Spanning six floors of the main branch, the Louis Vuitton store offers not only shopping but also cafes, fine dining, and cultural experiences.

HYUNDAIDEPARTMENTSTORECO.,LTD views VIP customers from overseas retail channels as a key customer segment and is strengthening its collaboration with global retail companies. HYUNDAIDEPARTMENTSTORECO.,LTD recently signed a VIP partnership agreement with China’s BFC Mall to attract young, affluent Chinese customers. When Chinese VIP customers visit HYUNDAIDEPARTMENTSTORECO.,LTD, they receive the same benefits and services as domestic VIPs.

HYUNDAIDEPARTMENTSTORECO.,LTD has also revamped its Hyundai Department Store Card program to target foreign VIPs residing in Korea. The requirement for F-series visa holders was removed and replaced with more lenient criteria, such as having at least six months remaining on their stay. The card’s validity period was extended from one year to five years, and the credit limit was raised by up to six times.

HYUNDAIDEPARTMENTSTORECO.,LTD’s VIP tiers for foreign residents are identical to those for Korean residents. HYUNDAIDEPARTMENTSTORECO.,LTD’s VIP tiers consist of four levels: △Jasmine Black (annual purchases of 150 million won or more), △Jasmine Blue (annual purchases of 100 million won or more), △Jasmine (annual purchases of 65 million won or more), and △Sage·Club YP (annual purchases of 30 million won or more).

Lotte Department Store does not have a separate VIP tier for foreign customers. Instead, Lotte Department Store is enhancing the quality of service for foreign customers through partnerships with global financial institutions. Earlier this year, Lotte Department Store partnered with SC First Bank to offer exclusive shopping benefits to select overseas customers.

Lotte Department Store has recently partnered with banks in Greater China to offer cashback benefits to their VIP customers. Through December, customers of the Agricultural Bank of China will receive up to 13% cashback, and customers of China CITIC Bank will receive up to 12% cashback when paying with UnionPay.

The number of foreign visitors to Korea continues to rise steadily. According to the Ministry of Culture, Sports and Tourism, the number of foreign tourists visiting Korea reached 10.7 million in the first half of this year, a 21.3% increase compared to the same period last year. During the same period, foreign credit card spending on tourism also rose by 50.8% to 10.0389 trillion won.

An official from the domestic department store industry stated, “Given that there are limits to how many new stores domestic department stores can open, it is becoming increasingly important to encourage repeat visits by foreign tourists and raise the average transaction value.” The official added, “With the exchange rate on a downward trend, domestic department stores are engaged in fierce competition to secure foreign VIP customers.”