Lotte Department Store's Nowon branch has confirmed that the complete renewal schedule has been postponed to the second half of next year. Initially planned to start this year, the decision was made based on the judgment that certain store operations would have to be suspended during construction, inevitably impacting sales.
According to the retail industry on the 21st, Lotte Department Store has decided to postpone the Nowon branch renewal initially scheduled to start this year to the second half of next year. This is part of the 'eight major store renewal plan' initiated by Lotte Department Store CEO Jung Jun-ho since 2022.
Lotte Department Store's Nowon branch is located in Nowon District, which is densely populated with various schools, large apartment complexes, and public transportation such as subways, making it a representative retail facility in the northern part of Seoul.
Initially, Lotte Department Store planned to renovate the Nowon branch centered around a premium food court. The strategy aimed to attract customers with food offerings and encourage purchases in fashion, beauty, and luxury goods. Lotte successfully implemented this strategy at its Incheon branch in December last year and its Suwon branch in April this year by launching upscale food courts.
Analysts suggest that Lotte Department Store's decision to postpone the Nowon branch renewal reflects an intention to minimize sales impact. The Nowon branch recorded sales of 430.4 billion won in 2023, ranking 26th among department stores nationwide and 7th within Lotte Department Store.
Although the entire department store industry is affected by a recession, Lotte's performance remains subpar compared to competitors. In the first half of this year, Lotte Department Store's operating profit was 152 billion won, a 22.1% decrease compared to the same period last year. In contrast, its competitor Shinsegae Department Store reported a 7.6% decrease with 280.5 billion won, while Hyundai Department Store saw a 19.5% drop to 111.7 billion won.
The simultaneous renewal of other stores also influenced this decision. Lotte Shopping has identified the large shopping mall Times Villa as a mid- to long-term growth driver and is focusing its investments there. Lotte Department Store recently reopened its Suwon branch under the new name Times Villa and is also pursuing plans to open Times Villa locations in Daegu and Songdo, Incheon.
A source in the retail industry noted, 'Renovating a department store requires a significant amount of money, and currently, some of Lotte's affiliates are experiencing financial difficulties.' Lotte Department Store stated that the store renewal issue is not related to other affiliates.
A representative from Lotte Department Store said, 'We are progressing with the renewal plan for the Nowon branch, but we have not officially announced the implementation time. The food court renewal has not yet commenced this year. Currently, we are in the process of establishing Nike stores on the 7th and 8th floors.'
However, the complete renewal of Lotte Department Store's Nowon branch aims to establish a premium food court and is not related to the construction on the 7th and 8th floors.