Polarization in sales in Korea's department store industry is deepening. While stores in Seoul and large outlets are expanding, small and midsize department stores in the greater Seoul area and in the provinces are losing competitiveness. Led by Lotte Department Store, an industrywide restructuring to close low-profitability stores and focus on core outlets is gaining momentum.
On the 15th, at Lotte Department Store's Bundang branch in Bundang District, Seongnam, Gyeonggi Province. Perhaps because it is slated to close in March this year, the store was desolate when visited around 6 p.m., the evening commute time. In the cosmetics, apparel, household goods, and furniture sections, only employees were occasionally visible. Even at brand discount counters set up throughout the store, only merchandise was piled up, and it was hard to find customers browsing.
Even among the customers moving between the first-floor lobby and the basement food hall, many were foot traffic from the subway station connected to the department store rather than shoppers. The imported food discount event underway appeared, contrary to the description of a special promotion, to be more about clearing inventory with shelf lives in mind. Most products had best-before dates only through this year, with higher discount rates as the dates neared.
As of the 25th, according to related industry sources, Lotte Department Store has recently been accelerating the closure of inefficient outlets, including the Bundang branch. Most are small, midsize, aging stores located in the greater Seoul area and in the provinces, and the company is pushing a strategy of "selection and concentration," focusing on flagship large stores. It plans to step up investment in core outlets such as Lotte Jamsil, the main store (Myeong-dong), and the Busan main store, each with annual sales exceeding 1 trillion to 3 trillion won.
Opened in 1999, the Bundang branch was Lotte Department Store's first store in Gyeonggi Province and was once the area's representative department store, but profitability worsened as nearby competitors such as Hyundai Department Store Pangyo opened. As of 2024, the Bundang branch recorded 162.3 billion won in sales, ranking 58th among 68 major department store outlets in Korea.
This trend is appearing across the department store industry. As sales continue to concentrate at flagship large outlets, underperforming stores in the greater Seoul area and in the provinces are closing one after another. Following NC Department Store's Seomyeon branch the year before last, last year Grand Department Store's Ilsan branch and Hyundai Department Store's D-Cube City branch closed. Store consolidations and renewals (makeovers) are also continuing.
Shinsegae and Hyundai Department Store are increasing investment in luxury boutiques and experiential content, considered key strengths of major outlets. They are expanding the recruitment of luxury brands and beefing up attractions beyond shopping, such as cultural programs, food and beverage (F&B) outlets, and pop-up stores. They are also focusing on attracting VIPs (preferred customers) through premium services such as dedicated lounges and high-end classes.
Cumulative sales last year across the department store industry also show a clear polarization. Among the 40.4402 trillion won in sales at 65 outlets of the five major department stores—Lotte, Shinsegae, Hyundai, Galleria, and AK—the top 10 outlets accounted for 49.8%, nearly half. This group includes Shinsegae Gangnam, Lotte Jamsil, Shinsegae Centum City, Lotte Main, and Hyundai Pangyo. Some expect this share to exceed 50% next year.