South Korea's department stores reduce VIP benefits

Analysts said VIP customers surged amidst a spike in luxury consumption.

South Korea’s department store chains have been reducing benefits for top-spending VIP customers as a sharp rise in the number of such customers has led to a steep increase in related expenses, Korea Bizwire reported.

Lotte Department Store has introduced a new VIP customer system that reduced the number of classification categories to reduce its mid-level VIP customers, its first changes to the program in 20 years, according to industry sources.

Hyundai Department Store has also revised the annual spending standard for mid-level VIP customers from more than $31,520 (KRW40m) to more than $43,860 (KRW55m). The standard for higher-level VIP customers was also revised upward from $63,800 (KRW80m) to $95,700 (KRW120m).

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Shinsegae Department Store recently removed the benefit of giving away free drinks to VIP customers who spend more than $3,190 (KRW4m) won a year.

Industry watchers told Korea Bizwire that department store chains may have no other option but to do so because the number of VIP customers have recently surged due to the spike in luxury consumption amidst the pandemic.