[Edaily Reporter Han Jeon-jin ] Lotte Department Store’s Centum City branch is set to be acquired by Shinsegae Co.,Ltd. Lotte has decided to sell the store’s assets and cease operations. Shinsegae Co.,Ltd. plans to integrate the acquired store with its existing department stores and shopping malls, and combine this with the development of hotels, offices, and residences to transform the Centum City area in Busan into “Shinsegae Town.” This marks the reorganization of the two stores, which have long competed in the same commercial district, into a single retail hub.

According to both companies on the 29th, Lotte Department Store Co., Ltd. ( LOTTE SHOPPING CO., LTD.(023530)) has agreed to sell the assets of the Lotte Department Store Centum City branch in Haeundae-gu, Busan, to Shinsegae Co.,Ltd. ( Shinsegae Co.,Ltd(004170)). The transaction is reportedly valued at approximately 200 billion won. The deal is expected to be finalized after completing relevant procedures, including a business combination review by the Fair Trade Commission. This marks the first-ever store acquisition and transfer transaction between Lotte and Shinsegae Co.,Ltd, the two giants of the domestic department store industry. It is considered highly significant that these retail giants have joined forces to pursue “selective focus” for practical benefits, even amid fierce competition.

◇Lotte Sells Store… Shinsegae Co.,Ltd Expands Mixed-Use Hubs

The Lotte Centum City store opened in 2007, but competition intensified two years later in 2009 when Shinsegae Co.,Ltd. opened nearby. While Shinsegae dominated the commercial district by featuring luxury brands and large-scale shopping and cultural facilities, Lotte struggled to differentiate itself. The store’s competitiveness weakened as luxury brands withdrew one after another.

Lotte sought to revitalize the store by changing its product mix and spatial layout. In 2024, it brought Musinsa Standard to the first floor in an attempt to attract younger customers. It also pursued a zoning change to add office and fitness facilities, but made no progress.

The sale process was also rocky. Lotte began the sale process in 2024 but failed to select a preferred bidder during the final bidding round in November of that year. Analysts noted that zoning restrictions on the site made it difficult to convert it into residential or office space, thereby reducing the investment appeal for developers. Shinsegae Co.,Ltd, on the other hand, faced different circumstances, as it could utilize the property as a retail facility by linking it with its existing adjacent stores.

Shinsegae Co.,Ltd plans to renovate the acquired store and redevelop it into a mixed-use space combining shopping, culture, and leisure. The company intends to link the existing Shinsegae Centum City, Centum City Mall (which opened in 2016), and the newly acquired space to offer differentiated content and enhance efficiency through integrated operations.

The company is also moving forward with the development of Site C within Centum City. The vision is to create a complex combining shopping, business, lodging, and residential functions by constructing a luxury hotel, prime office space, and premium residences. Shinsegae intends to organically connect the department store with the mixed-use development to establish it as a hub that attracts both tourists and business travelers.

When Shinsegae Co.,Ltd. Centum City opened in 2009, it introduced a shopping space that integrated leisure and cultural amenities, such as a spa and an ice rink. In 2016, it became the first regional store to surpass 1 trillion won in annual sales, and from 2023 through last year, it recorded annual sales of over 2 trillion won for three consecutive years. This acquisition is expected to serve as an opportunity to expand the existing store’s customer base into the surrounding areas.

◇ Lotte to Focus Investment on Busan Main Store and Other Locations… Considering Staff Reassignment

The schedule for the closure of the Lotte Centum City store will be finalized after the relevant reviews are completed. The store will continue normal operations until the transaction is finalized. Lotte plans to announce the closure plan well in advance to provide sufficient notice to customers, employees, and tenant partners. For employees, Lotte will prioritize reassignment within the Busan commercial district, and for tenant partners, it will support business transitions in accordance with contract terms.

LOTTE SHOPPING CO., LTD. will use the sale of the Centum City store as an opportunity to concentrate its investments on key growth hubs. In Busan, the company is preparing a full-scale renovation of its Busan Main Store. Starting this month with the IP specialty section, the renovation will proceed in phases. Lotte Mall Dongbusan also plans to meet local shopping demand by continuously strengthening its product lineup.

Investments in major stores nationwide will also continue. This year, the company completed full-scale renovations of the Incheon and Nowon branches, and the Jamsil branch began its full-scale renovation this month, starting with the food hall. The company is also pushing ahead with the opening of large-scale shopping facilities in Suseong, Daegu; Sangam, Seoul; Songdo, Incheon; and Jeonju, Jeonbuk. The strategy is to reorganize the store portfolio based on profitability and growth potential and to concentrate resources on core stores and shopping mall operations.

Lotte Department Store explained that the decision to sell was based on the fact that there were limitations to securing growth and profitability at the Centum City store, and that it was deemed more efficient to concentrate resources on growth hubs, taking into account asset value and business viability.

Park Ju-hyung, President and CEO of Shinsegae Co.,Ltd, stated, “This acquisition is highly significant in that it has created a business environment where both companies can move beyond competition and achieve further growth.” He added, “Taking this acquisition as an opportunity, we will develop Shinsegae Centum City into a ‘Shinsegae Town’ where shopping, culture, tourism, and urban spaces are organically integrated, establishing it as a global landmark that represents South Korea.”