[Edaily Reporter KYUNG GYEYOUNG ] The restructuring of department store locations is gaining momentum. As online shopping has become part of everyday life, the unique experiences offered exclusively by physical spaces—such as cultural and food and beverage (F&F) offerings—have become increasingly important. Following Shinsegae Co.,Ltd. and HYUNDAIDEPARTMENTSTORECO.,LTD., which moved early to expand their key locations, Lotte Department Store has also adopted a strategy of “selection and concentration” for its flagship stores and has begun closing underperforming locations.

According to the department store industry on the 3rd, LOTTE SHOPPING CO., LTD.(023530)recently decided to sell the assets of the Lotte Department Store Centum City branch in Haeundae-gu, Busan, to Shinsegae Co.,Ltd. The Lotte Department Store Centum City branch, having seen its sales shrink to the 100 billion won range due to competition from the world’s largest Shinsegae Department Store Centum City branch, has entered into its first store sale transaction with Shinsegae Co.,Ltd.

In addition, following the closure of its Bundang branch in Gyeonggi Province last March, Lotte Department Store is moving forward with the sale of its Mia branch. There is also speculation that the Konkuk University Star City branch, whose lease expires in 2028, may cease operations.

Instead of divesting these stores, Lotte Department Store is focusing on expanding its core locations. In early October, Lotte Department Store completed the renovation of its Gangnam branch, transforming it into a “premium hyper-local store.” The company also carried out full-scale renovations of its Incheon and Nowon branches this year. Additionally, Lotte Department Store has begun a premium renovation of its Jamsil branch, which aims for annual sales of 4 trillion won.

A Lotte Department Store official explained, “Based on a thorough analysis of the characteristics and growth trends of each local commercial district, we are concentrating our renovation efforts on a strategy to create a significant competitive edge by maximizing the competitiveness of our key flagship stores,” adding, “We have adopted a strategy of selection and concentration given the already saturated department store market.”

HANWHA GALLERIA is also reviewing various options, including a sale, for its Daejeon Time World branch, which has been experiencing a decline in sales. This is part of the company’s focus on the high-end market, as evidenced by its investment of around 1 trillion won in the reconstruction of its Apgujeong Luxury Mall.

The reason the department store industry is pursuing a strategy of scaling up is due to the shift in consumer behavior toward online shopping. As major purchasing channels—from groceries to fashion, beauty, and household goods—have moved online, the primary challenge for department stores has become providing content that can only be experienced in physical spaces. Luxury brands, which are the core of department stores, are also being concentrated in flagship stores. Ultimately, this means that only stores with a certain level of floor space and customer draw can showcase experiential facilities—such as pop-up shops—and luxury brands as unique selling points.

Lee Jong-woo, a professor in the Department of Distribution and Marketing at Namseoul University, said, “Consumers now buy goods online and go to department stores for experiences and dining,” adding, “Since small-scale department stores find it difficult to implement experiential content, they are inevitably targeted for streamlining.”

Shinsegae Co.,Ltd. has already pursued a strategy of establishing top regional landmarks since the 2016 expansion of its Gangnam branch, including the world’s largest Centum City branch, as well as the Daegu and Daejeon Art & Science branches. Last year, the Gangnam branch ranked first in sales among all department store locations. The Centum City branch was the only non-Seoul metropolitan area location to achieve 2 trillion won in sales. The Daegu branch and the Art & Science branch also surpassed 1 trillion won, securing the top spot in their respective regions.

HYUNDAIDEPARTMENTSTORECO.,LTD is also focusing its efforts on flagship locations, such as The Hyundai Seoul and the Pangyo branch. Breaking the traditional department store mold, The Hyundai Seoul set a record by reaching 1 trillion won in sales in the shortest time ever—even without luxury brands—and the Pangyo branch also surpassed 2 trillion won in sales last year.

Lee Dong-il, a professor in the Department of Business Administration at Sejong University, analyzed, “The trend toward larger-scale and mixed-use department stores is an inevitable choice for survival.” He added, “A Michelin three-star restaurant signifies that ‘it is worth taking a special trip just to taste that dish’; now, it is becoming increasingly important for shopping spaces to possess Michelin three-star-level competitiveness.”