Those lit­tle lux­u­ries can mean large prof­its

Trend of oc­ca­sional splurg­ing on small items lifts re­tail­ers

JoongAng Daily - - Business & Finance - BY LEE SU-GI, PARK EUN-JEE ej­park@joongang.co.kr

Look­ing over care­fully dec­o­rated cakes and rolls in the win­dow, 35-year-old Kim Mi-sun walks around and ad­mires the sweets at Mon Chou Chou, an up­scale Ja­panese bak­ery in Shin­segae Depart­ment Store.

She fi­nally chose the store’s sig­na­ture Do­jima Roll that uses fresh cream from Hokkaido. The roll cake costs 18,000 won ($16), twice as much as or­di­nary rolls.

“It’s not that ex­pen­sive if you think that it’s for treat­ing your­self,” she says.

Kim is one of a le­gion of con­sumers who oc­ca­sion­ally splurges on pre­mium small things — sweets, ac­ces­sories, key chains, can­dles and per­fume. Con­sist­ing largely of women in their 20s and 30s, the cus­tomers seek plea­sure and sat­is­fac­tion by spend­ing a lit­tle ex­tra on lit­tle things for them­selves.

In front of Mon Chou Chou is a long line of cus­tomers, and some of them leave with­out Do­jima Rolls be­cause they are sold out.

The bak­ery re­cently dou­bled its daily roll or­der from 500 to 1,000.

Dessert sales sur­passed those of other foods by 5.1 per­cent last year for the first time at Shin­segae in Ban­podong, south­ern Seoul.

Be­cause of the pop­u­lar­ity of up­scale treats, the depart­ment store re­fur­bished its dessert and gro­cery sec­tion in July and added new dessert brands.

Among them are Ve­niero’s, a New York-based Ital­ian bak­ery and cheese­cake company; Ho­tel Douce, which of­fers tra­di­tional French sweets; and La Mon­tee, which uses French in­gre­di­ents and nat­u­ral yeast.

Many of stores are po­si­tion­ing their sweet treats as lux­ury items, say­ing their desserts are not sug­ary junk food, but made with high-qual­ity in­gre­di­ents. The treats usu­ally can be made to or­der with a va­ri­ety of op­tions for bases and jams.

Dessert sales last year stood at 90 bil­lion won, up from 40 bil­lion won in 2008.

While sweets can tempt de­mand­ing palates, fra­grances can be gen­tle on the nose and set a mood.

The pop­u­lar­ity of prod­ucts such as scented can­dles and dif­fusers has taken off at Lotte Depart­ment Store.

The num­ber of stores sell­ing those prod­ucts in­creased by 50 per­cent this year com­pared to a year ago, and sales growth over the past three months was 154.4 per­cent com­pared to the same pe­riod last year.

“They [can­dles and dif­fusers] will not cost you mil­lions of won like lux­ury cars or de­signer bags,” says Kim Woo-chan, a se­nior mer­chan­diser at Lotte Depart­ment Store. “Still, con­sumers can feel they are get­ting ex­cel­lent prod­ucts. Now, fa­mous de­signer brands also are look­ing to launch small items of their own.”

At Hyundai Depart­ment Store, sales of per­fume in­creased 20 per­cent last month com­pared to Septem­ber 2013.

Creed, Dip­tyque and other pre­mium per­fume brands have been par­tic­u­larly well-re­ceived with sales growth of more than 30 per­cent this year.

“At Santa Maria Novella, an Ital­ian cos­met­ics brand, the sales growth of its per­fume lines is almost dou­ble that of ba­sic creams,” says Kim Kyung-in, a cos­met­ics buyer at Hyundai Depart­ment Store. “The most popular per­fume brand is Bond No. 9, a New York-based per­fume house. The price point is fairly high in the neigh­bor­hood of 300,000 won, but it’s amaz­ingly popular.”

Smaller ac­ces­sories such as key chains, ban­gles and um­brel­las also are find­ing niche mar­kets.

Most peo­ple would never think of um­brel­las as lux­ury goods, but Ful­ton Um­brel­las can cost more than 100,000 won. The U.K. company’s prod­ucts be­came fa­mous after Queen El­iz­a­beth was pho­tographed us­ing one.

At Shin­segae, daily sales of Ful­ton Um­brel­las soared to 3 mil­lion won dur­ing the peak of rainy sea­son in Au­gust.

Men also claim their right to dab­ble in pre­mium goods, such as socks and hand­ker­chiefs.

Shin­segae Depart­ment Store said sales of men’s socks jumped 50 per­cent in Septem­ber com­pared to last year.

Even though socks de­signed by Swe­den’s Happy Socks cost 60,000 won per pair, they fre­quently sell out.

“It’s pretty ob­vi­ous that those socks are much more ex­pen­sive than typ­i­cal ones,” says Park Je-wook, a men’s wear buyer at Shin­segae, “But it can also be seen as an af­ford­able way to show off your fash­ion sense when com­pared to de­signer suits and bags. Older men in their 40s and 50s have be­gun look­ing for more fash­ion­able socks.”

Nonethe­less, the main con­sumer base for those pre­mium items con­sists of 30-some­things who earn a fair amount of money. Re­tail­ers say the younger gen­er­a­tion is more con­scious of hap­pi­ness and qual­ity of life than baby boomers.

“Those who were born in the 1980s are in­ter­ested in some­thing en­ter­tain­ing and re­fresh­ing,” says Son Youngsik, a man­ager at Shin­segae. “They en­joy trav­el­ing and are more open to new ideas. That’s a big dif­fer­ence from men in their 40s and 50s, who tend to pur­sue suc­cess or be in­ter­ested in po­lit­i­cal and so­cial is­sues rather than seek­ing out some­thing to make them happy.”

Son added that sin­gles or cou­ples with­out chil­dren are more likely to spend money on those items be­cause they have higher dis­pos­able in­comes.

In a sin­gle house­hold, 32.9 per­cent of the in­come is dis­pos­able com­pared to 17.2 per­cent for three- to four-per­son house­holds, ac­cord­ing to the Korea Cham­ber of Com­merce.

When the Shin­segae store in Hoe­hyeon-dong revamped its food out­lets with lux­ury dessert shops at the end of Au­gust, over­all sales rose 10 per­cent.

“Those who are in­ter­ested in bet­ter sweets are more likely to be at­tracted by bet­ter fash­ion ac­ces­sories or pre­mium per­fumes,” says Son, “and they usu­ally have very dis­tinc­tive, rather de­mand­ing taste and act as mar­ket trendsetters. So, if we can serve them well, it will be more likely that cer­tain trends spread out to the wider con­sumer base.”

[JoongAng Ilbo]

Mon Chou Chou, an up­scale Ja­panese bak­ery at Shin­segae Depart­ment Store, is swamped with cus­tomers as more and more peo­ple to spend ex­tra money for high-end sweets.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.