Add 'K-shaped' consumer polarization to the list of Korean trends

A convenience store near Gwanghwamun Square in central Seoul displays a banner welcoming BTS’s comeback on March 22. [NEWS1]

 
There are concerns that "K-shaped" consumer polarization could become entrenched in the retail industry as high inflation and a prolonged economic slowdown persist. 
 
K-shaped consumer polarization refers to a widening gap in spending between high-income consumers and those in the middle class or below.
 

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Department stores were the only one of five retail segments — department stores, hypermarkets, duty-free shops, supermarkets and miscellaneous goods stores and convenience stores — to post higher sales in 2025 than a year earlier, according to Korean Statistical Information Service data on retail sales by store type released Thursday.  
 
Department store sales came to about 41.4 trillion won ($27.5 billion) in preliminary 2025 figures, up from 40.6 trillion won in 2024.
 
Over the same period, convenience store sales fell to 31.6 trillion won, down by more than 100 billion won from 2024, while duty-free shop sales came to 12.5 trillion won, a drop of more than 2 trillion won. Since related data collection began in 2020, department stores have been the only channel to post annual sales growth every year.
 
Hypermarkets, by contrast, recorded their first year-on-year decline since retail sales by channel began to be tracked. Sales at hypermarkets came to about 36.4 trillion won in 2025, down about 2 percent from about 37.1 trillion won in 2024.  
 
Sales in 2025 at hypermarkets in the home and living and home appliances and culture categories fell 10.1 percent and 10.9 percent from a year earlier, according to the Ministry of Trade, Industry and Resources. Food sales, the segment’s main product category, also dropped 2.9 percent from 2024.
 

The area surrounding Gwanghwamun Square in central Seoul ahead of the “BTS The Comeback Live: Arirang” performance on March 21 [DANIELA GONZALEZ PEREZ]

 
Experts pointed to the departure of middle-class consumers as the main reason for weak performance across retail channels other than department stores. The prolonged economic slump appears to be weighing on midrange everyday spending.
  
“Department stores not only succeeded in drawing in shoppers with experiential content such as pop-ups, but they were also relatively less affected because their main customer base is made up of high-income consumers who are less shaken by economic downturns,” said Lee Hong-joo, a professor in the Department of Consumer Economics at Sookmyung Women’s University. “By contrast, consumers in the middle class and below have either cut spending or flocked to sellers offering the lowest-priced goods, producing a typical K-shaped pattern of consumer polarization.”
 
In fact, VIP customers accounted for nearly half of total 2025 sales at the country’s three major department store chains. VIP sales made up 46 percent of total sales at Lotte Department Store and Hyundai Department Store and 47 percent at Shinsegae Department Store last year. 
 
Each company has accordingly been doubling down on premium strategies, including expanding luxury lineups and revamping VIP membership tiers.
 
Hypermarkets and convenience stores, which once experimented with experience-driven strategies through luxury product lines, are now concentrating on ultra-low-priced private brand (PB) products. Emart recently launched 127 new products under its 5K PRiCE private brand, including a 5,000-won hair dryer and a vacuum cleaner in the 9,000-won range, along with a range of other home appliances and living products priced below 10,000 won.
 

A convenience store near Gwanghwamun Square in central Seoul displays a banner welcoming BTS’s comeback on March 22. [NEWS1]

 
5K PRiCE initially focused on processed food items, but now Emart is looking to attract consumers with value-for-money products in home appliances and household goods, categories that posted weak sales in 2025.
 
GS25, the convenience store chain operated by GS Retail, also expanded its lineup of 1,000-won pouch drinks on March 12. It has also shifted a promotion that gives customers a free cup of ice with pouch drink purchases to a year-round event.
 
“We expanded our low-priced PB pouch drink lineup to ease the burden on consumers amid high inflation,” a merchandiser on the GS25 beverage team said.
 
“As more consumers seek rational spending amid a prolonged slump in domestic demand, hypermarkets have also been reshaping their sales strategies by focusing on value-for-money product lines,” said Lee Jung-hee, a professor at Chung-Ang University’s School of Economics. “In retail channels outside department stores, competition centered on value-for-money products to attract middle-class consumers is likely to continue for some time.”


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NOH YU-RIM [kim.minyoung5@joongang.co.kr]