As large numbers of foreign tourists pour into Myeong-dong in Seoul, the rivalry for neighborhood dominance between Lotte Department Store's main branch and Shinsegae's main branch is heating up again. Shinsegae's main branch has moved to catch up with Lotte's main branch, the No. 1 department store in northern Seoul, by expanding luxury brand boutiques through a phased renewal. In response, Lotte's main branch plans to raise dwell time and average spend per customer with a "town strategy" that links the main building, Avenuel, and Young Plaza into a single commercial zone.
Lotte's main branch, which ranked fourth in sales among department stores nationwide last year, has steadily widened its lead over Shinsegae's main branch, which ranked 10th. The industry is watching to see whether Shinsegae's main branch can narrow the gap on the back of renewal effects and rising sales to foreign shoppers.
According to the retail industry on the 22nd, French luxury brand Christian Dior plans to open a two-story boutique on the first and second floors of "The Estate," the new building at Shinsegae Department Store's main branch, in August. The Dior boutique currently on the third floor of the new building will be expanded and transferred to the first and second floors.
If the Dior boutique opens as scheduled, Shinsegae's main branch will further strengthen its luxury lineup. In recent years, Shinsegae's main branch has enlarged key high-end brand boutiques such as Hermès, Chanel, and Louis Vuitton through renewals. The Hermès and Chanel boutiques at Shinsegae's main branch are currently the largest among department stores in Korea. The Louis Vuitton boutique spans six floors and has been built as a multi-experience cultural space combining fashion, watches and jewelry, beauty, a restaurant, and a café, and it is the largest in the world.
Shinsegae's main branch is also seen as having the country's top-tier lineup of jewelry brands. Including the high jewelry lines of Chanel and Louis Vuitton, it carries all luxury jewelry and watch brands such as Cartier, Van Cleef & Arpels, Tiffany & Co., and Rolex.
As Shinsegae's main branch dramatically strengthens its luxury lineup, Lotte's main branch is responding with boutique renewals as well. Since last year, it has accelerated the "Lotte Town Myeong-dong" strategy to create synergy by bundling not only the main building but also Young Plaza and Avenuel.
Lotte Department Store began a full renovation of the main branch's Young Plaza in April last year. Located in the heart of Myeong-dong, Young Plaza is a fashion-focused store targeting younger shoppers, introduced the year after Lotte acquired the former Mido Department Store's Metro Mido branch in 2002. Lotte plans to reorganize the site into a K-content specialty zone that combines fashion, food and beverage, and art.
In the second half of last year, Lotte's main branch also unveiled "Kinetic Ground," a K-fashion specialty zone centered on emerging designer brands, on the ninth floor of the main building. Fifteen Korean fashion brands popular with foreigners, including Mardi Mercredi, Matin Kim, The Barnnet, and Nonenill, opened there. Reflecting the characteristics of the Myeong-dong market, which draws many foreign tourists, the strategy is to make not only luxury but also K-fashion and K-content part of the main branch's competitiveness.
Lotte's main branch and Shinsegae's main branch are regarded as flagship stores in the northern market, each generating more than 1 trillion won in sales. According to the industry, Lotte's main branch posted 2.1863 trillion won in sales last year to rank fourth nationwide, while Shinsegae's main branch recorded 1.2525 trillion won to rank 10th.
In recent years, Lotte's main branch has widened its sales gap with Shinsegae's main branch. The 664.4 billion won gap between the two stores in 2021 expanded to 933.8 billion won last year. While Shinsegae's main branch maintained sales in the 1 trillion won range and continued to grow, analysts say prolonged large-scale renewals significantly constrained boutique operations.
However, starting this year, the renewal effects at Shinsegae's main branch are expected to be fully reflected in sales. In department stores, luxury brands typically have a high proportion of expensive items, strongly lifting average spend per customer and sales. Given that Shinsegae's main branch now houses large boutiques for key brands including Hermès, Chanel, Louis Vuitton, and Dior, analysts say it will also see a stronger draw for VIP customers and foreign tourists.
"In the department store market lately, a few core stores are increasingly driving overall growth," a retail industry official said. "Since Lotte's main branch and Shinsegae's main branch both represent the northern market, the key to the Myeong-dong rivalry will be who can keep foreign tourists longer and get them to spend more."