By Jane Han
Staff Reporter

Walk along Cheongdam-dong's main street in the upper crust of Seoul and you'll run into an under-construction five-story Cartier boutique set to open its doors in October. This is the luxury jewelry maker's first flagship expansion here. Apparently, its existing store wasn't big enough to meet local demand.

The booming situation is no different farther down the street, where the town's top high-end shopping center stands. Hyundai Department Store's luxury brand sale last weekend saw a sales jump of 82 percent compared to that of a similar promotion last year.

Business is great, sales agents say, adding that they even have backed up orders.

All of this is a stark contrast from the current economic slump most average Koreans are suffering from.

The Bank of Korea said early this month that the nation's household debt hit an all-time high of 640 trillion won in March. But skyrocketing oil prices, staggering economic growth and higher inflation hints that the worst isn't over yet for the majority of South Koreans.

Does this mean that the big spenders at the malls are limited to the minor, uber-rich crowd?

``We wouldn't say all our shoppers are limited to only the super wealthy,'' says a luxury brand manager at the Hyundai Department Store. ``Our sales figures demonstrate that there is a general increase in consumers.''

Along with Hyundai, the nation's major chains, Shinsegae and Lotte, also posted similar hikes.

The Ministry of Knowledge Economy said Tuesday that sales at the top three department stores jumped 11.3 percent from a year earlier, which is the sharpest increase in two years. And among many items, sales of luxury goods, such as Louis Vuitton, Chanel and Gucci, climbed 39.1 percent.

The economic polar effect comes off as ironic, but industry experts don't find it surprising.

``No matter how tough the times are, the consistent demand remains strong. It has always been that way,'' says a Chanel shop manager at a downtown shopping center. ``It's not like you need cash to make purchases anyway.''

A survey of some of the top foreign brands in Seoul's top retailers shows that an overwhelming majority of shoppers make credit card purchases, with most buying in three-month installments.

``Our selections go easily beyond 1 million won, so it is definitely a burden for an average shopper to pay in full,'' says a spokeswoman for Boon The Shop, a multi-brand boutique similar to Barney's New York.

Kim Bo-kyung, the chairman of the Samsung Economic Research Institute's Trend Forum, says this consumer behavior is what leads to personal bankruptcy and a credit card crisis, such as the one the country saw in 2003.

In 2003-2003, 8 percent of the population was reported as delinquent on credit card payments. The problem stemmed from rampant credit card issuance and consumers' careless use for cash services.

``People with cash should spend, but people without cash should think again,'' he said, explaining that many people in their 20s and 30s fail to make a wise decision.

Observers have been increasingly warning of a second credit card crisis, as recent data shows that credit card spending is up again.

According to the Financial Supervisory Service, charge card spending in the first quarter totaled 112.5 trillion won, climbing 16.1 percent from a year ago. Buying in installments also showed growth, expanding 36.6 percent to 18.3 trillion won, while loan services totaled 26.5 trillion won, up 10 percent from last year.

Credit card advertisers have been easier to spot on the streets lately, and companies are promoting more aggressive campaigns cutting down interest rates to lure more customers.

While a majority of people are using plastic to pay for their daily necessities largely due to rising living costs, a significant amount of the spending is probably directed to ``unnecessary goods,'' says Kim Young-in, who specializes in consumer behavior at a private think tank.

``It's summer, the season of exposure, and people want to look good,'' he says.

Kim, the trend expert, agrees, explaining that extravagant spending is often a behavior that stems when people want to escape reality.

The tough job market, thinning wallet, and political confusion are all factors that trigger people to get involved in an ``outstanding activity'' to relieve stress, he says.

Lotte Department Store says high-end bags, wallets and belts, which are often considered top choices for ``newbie luxury buyers,'' have seen the biggest sales jump of more than 50 percent since last month.

jhan@koreatimes.co.kr