👨‍🏫Why Luxury in 2025 Is All-In on VVIPs

In Korea, duty-free shops have declared their break from daigou shoppers, department stores are further segmenting VIP tiers, and hotels are overhauling their membership programs. The luxury industry is bustling with change in 2025, and at the center of this transformation lies the VVIP segment.

While they account for only 1% of customers, VVIPs influence more than half of luxury sales. To win over these clients, luxury brands are deploying every tool at their disposal, from advanced AI technologies to ultra-private lounges. Big data is being used to analyze customer preferences, while luxury lounges are catering to individual tastes—even adjusting the temperature of a cocktail to suit a client’s liking.

But why is the luxury industry going all-in on VVIPs now? What strategies are brands using to capture their loyalty? Let’s take a closer look at how the duty-free, department store, and hotel sectors are reshaping the landscape of luxury in 2025.

🔍Understanding the Industry’s Current Trends

Duty-Free

The duty-free sector is undergoing significant restructuring to ensure both survival and growth. For instance, Lotte Duty Free has halted transactions with daigou shoppers as part of a strategic move to restore profitability. These shoppers, who previously purchased in bulk to resell in China and Southeast Asia, have long represented a major share of duty-free sales. However, their business model has led to excessive commission costs and intense price wars, ultimately weakening the profit structure of duty-free operators.

Lotte Duty Free is shifting its focus to VIP clients and Free Independent Travelers (FITs) for sustainable growth. Additionally, the rise of road shop consumption—where customers prefer individual shopping experiences at stores like CJ Olive Young and Daiso—highlights the need for duty-free shops to diversify their customer base and offer unique services.

In response, Lotte has reinstated its marketing division, creating specialized teams for strategic marketing, FIT marketing, and travel agency collaborations. A newly established Operations Innovation Division is also working to enhance efficiency and identify new growth opportunities based on precise demand forecasting.

Department Stores

The department store sector is facing increasing polarization between top-performing and underperforming locations. According to industry data, the top three stores of Lotte, Shinsegae, and Hyundai Department Stores generate 43–56% of their total revenue. Conversely, struggling stores are being closed or restructured to improve efficiency.

A key strategy has been to strengthen services for the top 10% of VIP customers, who account for 80–90% of department store sales. Shinsegae has introduced new VIP tiers and enhanced lounge benefits, while Hyundai offers tailored perks based on customer demographics. Similarly, Lotte is expanding exclusive benefits for VIPs to foster loyalty and reinforce relationships with high-value clients.

Hotels

The hotel industry is also undergoing significant changes. Several five-star hotels have revamped their paid membership programs to simultaneously enhance customer management and profitability. Amid declining satisfaction due to reduced benefits and increased membership fees, hotels are shifting their focus to premium services.

Rather than offering room discounts, hotels are expanding high-quality services, such as valet parking and elevated dining experiences. These adjustments reflect the evolving demands of VIP customers and are essential for securing their loyalty over the long term.