What: Department stores are enhancing VIP shopping experiences to cater to their highest-spending customers, who contribute disproportionately to overall sales.

Why it is important: VIP experiences build loyalty and can attract influential customers who may bring awareness to other potential high-value shoppers.

Department stores are intensifying their focus on VIP shopping experiences to capitalize on the spending power of their top customers.

In South Korea, where luxury retail spending per capita is the highest globally, retailers like Galleria Department Store have opened exclusive VIP clubhouses for customers spending at least KRW 40 million annually. This trend extends beyond Asia, with London's Harrods launching an exclusive club in Shanghai with a hefty annual membership fee.The emphasis on VIP customers is driven by the stark reality that just 1% of the highest spenders contribute around 25% of department store sales, while the top 20% account for 80% of revenue. This concentration of spending power makes catering to these customers crucial for financial success.

VIP experiences often include access to private rooms, personalized styling services, and exclusive events, creating a sense of exclusivity and fostering loyalty. Foreign VIP customers are particularly valuable, with some spending over KRW 10 million per visit. To attract and retain these clients, department stores are introducing loyalty programs specifically for foreigners, offering reward points and tailored services. The strategy extends to popular tourist destinations like Beverly Hills, where luxury stores provide VIP experiences such as private appointments and exclusive access to special areas. As department stores face challenges from e-commerce and changing consumer behaviours, focusing on VIP experiences allows them to differentiate themselves and leverage their physical spaces by creating memorable, personalized experiences for their most valuable customers.

Should department stores all have VIP services?