[Edaily Reporter Han Jeon-jin ] Department stores are accelerating the renovation of their flagship locations. This goes beyond simply refurbishing outdated stores. They are focusing on creating “landmarks” that combine shopping, dining, and cultural experiences in major commercial districts—such as Myeong-dong and Gangnam—which attract large numbers of foreign tourists. As the department store industry shows a clear recovery trend driven by improving consumer sentiment and an increase in foreign tourists, competition for store investments is becoming even more intense.

◇Facades on the Outside, K-Food Below… Department Stores Are Undergoing a Major Transformation
According to industry sources on the 4th, HYUNDAIDEPARTMENTSTORECO.,LTD(069960)has begun renovating its flagship stores in Gangnam and Dongdaemun. With the goal of starting next year, the company is reviewing renovations for areas such as the food court on the first basement level of the Trade Center branch. The plan centers on reorganizing key customer-drawing spaces, including the Hyundai Food Court and Food Hall. The Hyundai Outlet Dongdaemun branch will also undergo its largest-scale renovation since opening in phases through the end of the year, creating a dedicated K-fashion section and a food court focused on Korean cuisine. HYUNDAIDEPARTMENTSTORECO.,LTD official stated, “We have reflected the trend of demand expanding from a focus on Chinese tourists to tourists of various nationalities.”

This trend is not unique to HYUNDAIDEPARTMENTSTORECO.,LTD. While attracting luxury brands was once the key to competitiveness, the focus is now shifting toward “destination-style department stores” that combine space, content, and diverse experiences. In fact, Lotte Department Store and Shinsegae Co.,Ltd are also competing for market share, centered on their Myeongdong flagship stores.

Lotte Department Store plans to unveil “Lotte Town Light,” a massive media facade, on the exterior of its Myeongdong flagship store’s Young Plaza by the end of the year. The company also plans to transform “Cosmonegy Plaza”—a connecting passageway at Euljiro 1-ga Station that sees some 20,000 people pass through daily—into a landmark where tourists can linger. The Nowon branch, which underwent a 17-month renovation starting in March of last year, also held its grand opening on the 4th. Having revamped 80% of its retail space, it has completed its transformation into a landmark in northeastern Seoul. While the renovation was carried out in phases, sales in the first half of this year increased by 15% compared to the previous year.

Shinsegae Co.,Ltd began repositioning its flagship store as a high-end destination early on. Through the “The Reserve” project, completed in the first quarter of this year, it has established a lineup of global luxury brands such as Hermès, Louis Vuitton, and Chanel. The “Shinsegae Square” media facade, installed on the flagship store’s exterior in 2024, has also established itself as a key attraction for drawing foot traffic into the store. The results are also impressive. In the first quarter of this year, foreign card spending at the flagship store rose 98% year-over-year, significantly outpacing the average growth rate (17%) of the Gwanghwamun and Myeongdong commercial districts, while the growth rate for the luxury goods category approached 90%.

◇Preparing for a Slowdown in Foreign Demand… Enhancing Spatial Competitiveness
The recovery in the industry is driving department stores to accelerate their investment in renovations. According to the Ministry of Trade, Industry and Energy, department store sales in the first half of this year rose 20.1% year-over-year. The growth rate for the first half of last year was 0.5%. This stands in contrast to the negative growth recorded by hypermarkets (-7.3%) and medium-sized stores (-6.6%) during the same period. The number of foreign tourists visiting Korea in the first half of the year reached 10.71 million, a rise of over 21% from last year’s 8.83 million, and the consumer sentiment index rose from 97 to 107. The weakening of the Korean won, which has boosted foreign tourists’ purchasing power in Korea, is also acting as a positive factor.

In particular, foreign demand is spreading to downtown commercial districts such as Dongdaemun. From January to May of this year, foreign sales at the Hyundai Outlet Dongdaemun branch increased by 122% year-over-year, and the share of foreign sales in total revenue rose to 23.7%. This is due to the growing number of tourists visiting the Dongdaemun Design Plaza (DDP) and Gwangjang Market, which has led to Dongdaemun being repositioned as a destination for extended stays rather than just a shopping district. Industry experts predict that as long as the growth in the number of tourists visiting Korea continues, department stores’ investments targeting downtown commercial districts will also continue for the time being.

The key issue is sustainability. Foreign demand, which underpinned first-half performance, could fluctuate at any time depending on exchange rates and tourism trends. This is why department stores are investing not only in adjusting their store layouts but also in the spaces themselves—such as media facades, food courts, and plazas. The underlying rationale is that stores must establish themselves as part of a destination-based tourism itinerary—rather than just a brief stop along a tourist route—to maintain competitiveness even if demand slows in the medium to long term.

A retail industry official stated, “Although foreign demand has been robust recently, there is no guarantee that this trend will continue,” adding, “Securing a stable ability to attract customers that is not swayed by exchange rates or tourism trends has become more important than ever.” The official continued, “Since it has become difficult to differentiate solely through brand mix, competition over spaces and content that turn the stores themselves into destinations will become even more intense in the future.”