As K-fashion, sports, fast fashion (SPA) brands, and famous eateries move into prime department store space once occupied by women's wear and accessories such as shoes and handbags, the traditional merchandising (MD) playbook is changing fast. With the spread of online shopping making it harder to draw crowds through simple product sales, stores are reallocating floor space to content that can attract young customers and foreign tourists, speeding up a generational shift.
On the 27th, the retail industry said Lotte Department Store recently completed a 17-month renovation of its Nowon branch that began in Mar. last year. It revamped about 10,000 pyeong, or 80% of the total sales area, and overhauled the floor-by-floor MD. The first floor was specialized as a roughly 300-pyeong beauty zone, and the second floor was dedicated to a K-fashion zone led by Matin Kim.
On the eighth floor, it created a sports megashop centered on Nike, Adidas, and New Balance. Zara's store was expanded to over 350 pyeong, and Muji moved to a larger space than before. Brands targeting young customers have moved en masse into areas once occupied by women's wear and accessories, and SPA brands have also grown in scale.
In the basement level one, it added a roughly 500-pyeong premium food hall and a dessert-dedicated space called "Dessert Piazza." It also introduced the premium grocer "Repicerie" and brought together 25 stores, including famous eateries and dessert brands.
Lotte Department Store also opened a roughly 1,500-pyeong K-fashion zone called "Kinetic Ground" on the second floor of the Jamsil branch last year at the former Himart space. It filled the area with young fashion brands such as Matin Kim, The Barnet, and Setter, along with character intellectual property (IP) content. In Jan. this year, it became the first department store to host the "Musinsa Store."
Other department stores are also allocating larger spaces to F&B and young fashion brands at key locations. Shinsegae(004170) Gangnam branch opened a roughly 1,200-pyeong deli zone in Aug. last year, wrapping up a two-year overhaul of its food hall. The combined food hall—"Sweet Park," "House of Shinsegae," and "Shinsegae Market"—spans about 6,000 pyeong. The eighth-floor young fashion zone was also reorganized as "New Street," bringing in Emis, Mardi Mercredi, and Pottery.
Hyundai Department Store(069960) also carried out a large-scale renovation of its Jung-dong branch in 2024 for the first time in 20 years, reorganizing basement level one through the second floor of the U-Plex into a "Trendy Zone" centered on young contemporary and emerging designer brands. On the second floor, it added a "Musinsa Standard" store, and in basement level one it created a roughly 1,010-pyeong "Food Park" that brought together 56 brands, including domestic and overseas eateries and desserts.
Department stores are breaking the old MD formula because consumer behavior has changed. In the past, it was typical to divide floors by gender and category for higher-priced women's and men's wear and accessories such as shoes and handbags. Recently, however, as so-called "department store brand" apparel and accessories have become easy to buy online, simple product displays no longer provide enough reason to visit.
By contrast, K-fashion, SPA, and sports have established themselves as content that draws people in their 20s and 30s and foreign tourists. As interest in Korean fashion and beauty grows among foreign visitors, these have emerged as core traffic drivers for department stores. F&B also offers experiences that are hard to replace online, increasing both visit frequency and time spent.
The results are showing. At Lotte Department Store's Nowon branch, first-half sales this year rose 15% from a year earlier, and new customers increased by more than 50,000. Sales to people in their 20s and 30s rose more than 25%, and sales at the K-fashion zone climbed more than 35%. Food hall sales also increased more than 20% after the renovation.
At Lotte's Jamsil "Kinetic Ground," about 70% of visitors over the past year were in their 20s and 30s, and 70% of sales came from foreign customers. Eighty percent of visiting customers also purchased from other categories.
F&B sales are also growing faster than overall department store sales. In the first half of this year, Lotte Department Store's F&B sales rose 20% from a year earlier, outpacing the overall growth rate of 15%. During the same period, Shinsegae Department Store's F&B sales rose 29.1% and Hyundai Department Store's rose 22.8%, both higher than their overall growth rates of 23.6% and 20.7%. At Shinsegae's Gangnam branch, cumulative food hall customers surpassed 10 million from Aug. last year, when the renovation was completed, through Jul. this year. A department store industry official said, "The share of tenants that can draw young customers and foreign tourists—like K-fashion, sports, and F&B—will keep growing."