Department stores racing to expand size

Lotte’s main department store in central Seoul, left, and Shinsegae department store in southern Seoul

By Lee Hyo-sik

Lotte, Shinsegae and Hyundai are racing to expand their flagship department stores, despite the continued consumption slump, to secure the much-coveted title of having the largest retail shop in Seoul.

Shinsegae, the country’s third-largest department store operator, has already completed the renewal and expansion of its flagship department store in southern Seoul, currently the largest in terms of floor space.

Lotte is seeking to take that title away from Shinsegae by enlarging its store in downtown Seoul, with Hyundai attempting to do the same by constructing its largest outlet on Yeouido.

According to Lotte Department Store officials, Sunday, Junggu Office will release the results of its review of Lotte’s expansion plan as early as Monday. The company plans to build an additional 9-story structure on a parking lot near the department store in central Seoul by 2018.

On Sept. 23, Korea’s largest department store operator submitted a plan to the district office but it was later rejected. Lotte then submitted a revised version, pledging to build a park near its shop and create a cultural square on the top of the planned structure, among others.

Lotte officials expect the district office will approve the revised plan, adding that the firm will promptly undertake administrative procedures to begin construction in the first quarter of 2017.

“We would like to turn our flagship shop in downtown Seoul into the country’s largest department store by adding the 9-story building,” a Lotte official said.” When the additional structure is completed, we expect to generate more than 2 trillion won ($1.74 billion) in annual sales.”

The store earned 1.8 trillion won in 2015 but has not exceeded 2 trillion won since 1999 when its sales surpassed the 1 trillion won mark for the first time. Lotte expects that when the additional facility opens, the sale will easily beat 2 trillion won.

In addition, its floor space, including those of Young Plaza and Avenuel, will be extended to 90,000 square meters from the current 71,000 square meters, bigger than Shinsegae Department Store in southern Seoul, which spans 86,500 square meters.

It is yet to be decided but the expanded space will likely house various themed shops and “specialized” showrooms to attract people looking for differentiated shopping experiences.

Hyundai Department Store is also set to join the race by constructing its largest store at Parc One Tower in Yeouido, which spans 89,100 square meters in floor space.

In February, Shinsegae completed the renewal and expansion of its flagship department store at Seoul Express Bus Terminal in southern Seoul, making it the largest shop in the city.

The company expects the outlet will earn 1.7 trillion won in sales this year, up from last year’s 1.3 trillion won. The sales will then increase to 2 trillion won in 2019, despite the continued sluggish consumer spending, according to Shinsegae officials.