Monday, November 15, 2010

Korea's VVIP Shoppers

We've been following Korea's up market trends for a number of years. It manifests in their move in cars, fashions, electronics, food, and coffee. This JoongAng Daily article Profiling Lotte’s creme de la creme looks at VVIP shoppers.

Customers view a VVIP-only fashion show at Lotte Department Store’s Avenuel, a high-end section of the chain, early this year. Provided by the company

Imagine a customer at your nearby department store - let’s call her Mrs. Kim. She is in her early 50s, lives in the affluent Gangnam area of southern Seoul and visits department stores five times a week. Before each visit, she even calls up a store clerk to inform of her impending arrival.

She gets ideas for her next purchases from luxury magazines that are exclusively sent to select customers, and store clerks incessantly send pictures of newly arrived items to her mobile phone. If Mrs. Kim sees something she likes, she calls ahead - and when she visits the department store, the items are arranged so she can try them on at once.

Mrs. Kim is the profile of Lotte Department Store’s creme de la creme - its so-called VVIP customers, or those in the top 1 percent in terms of annual purchasing amount.

Extrapolated from customer demographic data provided by Lotte Department Store, the shopping patterns of the 58,800 VVIPs out of its 5.88 million customers nationwide from January to October this year are something the masses can only dream of.

According to the analysis, the largest portion of the top 1 percent, or the VVIP demographic, was occupied by housewives between the ages of 45 and 54. And 31 percent of the top 1 percent live in Gangnam, southern Seoul.

On average, these big spenders drop 455,000 won ($402) per visit, spending 208,000 won per item. In the first 10 months of this year, each VVIP spent 20.59 million won on average at department stores - which is more than 80 percent of the average annual income of Korean workers.

These high-flying patrons approach their shopping a little differently from the rest of the public. Unlike regular customers who often visit department stores on the weekend, the top 1 percent prefers shopping on a weekday.

Such big spenders sometimes strike up personal friendships with store clerks.

“Many VVIP customers tend to prefer clerks that listen to them talk or hold conversations with them, rather than receiving frivolous benefits such as free gifts,” said Yang Yoo-jin, a personal shopper at Lotte Department Store.

Department stores point out that the top 1 percent of their customers often have the tendency to keep buying the same brand.

On the high-end side, the hottest items for male VVIPs are tried-and-true luxury brands such as Armani suits and shirts, Louis Vuitton wallets and belts, and Rolex watches in the above-10-million-won range. Their female counterparts are devoted to Chanel bags, shoes and formal wear, in addition to Cartier watches.

But it would be a mistake to assume that these high rollers only buy foreign luxury brands. A surprising 43 percent were shown to have not bought a single luxury item at a department store during the research period. Many customers frequented domestic lingerie brands such as Venus and Vivian as well as Korean cosmetics brands such as Sulwhasoo.

“These are customers with comparatively more chances for overseas travel, and it can be surmised that they buy their luxury goods at duty-free stores and such,” said a representative of Lotte Department Store.

In order to engage these big-spending customers and inspire brand loyalty, department stores hold events exclusively geared toward such VVIPs. Lotte Department Store hosted a yacht party on the Han River for 20 selected VVIP customers on Nov. 10.

There are even special product sales for these powerful patrons. Hyundai Department Store, in celebration of the 39th anniversary of its founding, held an exclusive sale for its preferred customers, which consisted of luxury watches and accessories from brands such as Breguet and De Beers.

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