Dessert craze takes over Korean dep’t stores as luxury sales wane

Belgian luxury chocolate ‘Pierre Marcolini’ store in Gangnam branch of Shinsegae Department Store. [Photo by Lee Hyo-seok]

South Korean department stores are introducing hip dessert brands with hopes to boost food and beverage (F&B) sales, which have been outperforming the luxury segment.

According to industry sources on Sunday, Shinsegae Department Store Gangnam has successfully launched its dessert specialty zone, Sweet Park, which was part of its first revamp of its food section in 15 years.

Ever since the opening on February 15, Sweet Park has seen a remarkable performance, with 400,000 visitors in the first eight days.

Dessert sales at the Gangnam branch also soared by 205.1 percent during the same period, contributing to an overall store sales growth of 31.2 percent.

Lotte Department Store has also been capitalizing on the dessert trend, presenting large-scale dessert havens at its main and Jamsil branches since last year. In March 2023, Knotted World, spanning about 1,100 square meters across the 5th and 6th floors of Lotte World Mall in Jamsil, southern Seoul, attracted an average of 120,000 customers monthly.

The London Bagel Museum, which opened on the 1st floor of the same building in August, has been drawing over 150,000 visitors on average each month.

The ripple effect of increased customer spending is evident, with overall sales on the same floors (5th-6th and 1st floors) seeing a growth of over 30 percent compared to the same period in the previous year. The Hyundai Seoul, which achieved over 1 trillion won ($750 million) in annual sales in the shortest period, initially filled about 35 percent of its F&B area with bakery and dessert stores when it opened in 2021.

Two years later, dessert sales continue to exhibit positive growth, with a remarkable 68.9 percent increase in 2022 compared to the previous year and a further 44 percent surge in 2023.

As luxury sales growth wanes amid economic uncertainties, the industry is turning to F&B offerings that are more budget-friendly.

This has intensified the competition among department stores to attract customers with trendy dessert destinations.

Last year, Shinsegae Department Store’s luxury sales growth rate was a mere 0.3 percent, while F&B sales surged to an impressive 15.3 percent.

Similarly, Lotte Department Store experienced a modest 5 percent growth in luxury sales last year but saw a substantial 20 percent increase in F&B sales.

The fierce competition among department stores to secure popular dessert spots reflects the rapid expansion of dessert culture in Korea.

According to KB Kookmin Card data, sales at dessert specialty shops in Korea have shown steady growth, increasing by 0.2 percent in 2020, 18 percent in 2021, 35 percent in 2022, and 61 percent in 2023.