Invariably, in Korea as much as the rest of the world, cosmetics shops dominate the ground floor of department stores. The reason is simple: customers who purchased cosmetics items on the first floor account for more than 70 percent of retailers' total sales.
Hyundai Department Store analyzed the sales contribution of customers who paid with department store credit cards during the first 11 months of last year, to find out how much the annual spending of customers who bought specific items contributed to total sales. It showed that cosmetics purchasers make the biggest contribution.
Annual spending by those who had purchased cosmetics more than once accounted for 78.5 percent of total sales. By contrast, spending by customers of luxury or designer products represented only 46.4 percent of sales.
In the case of Shinsegae Department Store, cosmetics purchasers' contribution accounted for 71.2 percent of sales. The results mean that customers who buy cosmetics more frequently also buy more other products there than other customers.
Another reason for the placing of cosmetics halls on the ground floor is that they are seen as the most cost-effective. One cosmetics shop covers 23 sq.m, far less than the 33 sq.m a clothes outlet occupies. In many cases, cosmetics stores top the list of business performance in terms of sales per square meter. Setting it up is also easy, and the walls separating cosmetics counters are low, allowing customers to have an overview of the floor at a glance when they come in at the main entrance of the store.