Department stores eye growing affluence in southern Gyeonggi Province

Customers enter Lotte Department Store in Dongtan on Aug. 20, 2021. Yonhap

By Kim Jae-heun

Lotte, Shinsegae, Hyundai and Galleria are battling for an increasing number of high-income, young salaried workers south of Seoul, as large IT firms have established offices in the newly developed communities of Dongtan, Pangyo and Gwanggyo, respectively in the Gyeonggi Province cities of Hwaseong, Seongnam and Suwon, according to industry analysts Monday.

Shinsegae and Hyundai set up their department stores in Yongin and Pangyo in 2007 and 2015, respectively. They are competing with newcomers like Galleria and Lotte, which opened their branches in Gwanggyo and Dongtan in 2020 and 2021, respectively.

Gyeonggi Province was less attractive than Seoul for department store chains in the past. Chains did run shops in the area, but they did not sell luxury brands, which are synonymous with big margins for retailers.

However, after Samsung Electronics moved 700 employees from Seoul to Dongtan in 2016, followed by IT giants like Naver and Kakao setting up their headquarters in Pangyo, department stores began to target young and wealthy customers living in southern Gyeonggi Province.

Hyundai Department Store's Pangyo branch saw sales surpass 1 trillion won in the last two years. It is the only department store in Gyeonggi Province to achieve over 1 trillion won in revenue. It has been successfully attracting customers living nearby in Gwanggyo as well as the cities of Yongin, Anyang and Yeoju, and its sales increased year-on-year by 23.2 percent to 1.24 trillion won.

“The commercial district of southern Gyeonggi Province is growing steadily thanks to the convenience of accessibility via the Gyeongbu Expressway. Large companies like Samsung Electronics and Naver have come to the region and retailers are competing against each other to target the high-income IT firm workers,” a Hyundai Department Store official said.

Populations are growing in the regional cities of Yongin, Hwaseong and Osan, which encourages retailers to expand their businesses in the vicinity.

Lotte Department Store opened its Dongtan branch last August and successfully established itself there by achieving 235.5 billion won in sales in only four months. Lotte plans to attract customers living in a 5-kilometer radius of its Dongtan branch, who find travelling to Gwanggyo or Yongin too far.

Galleria Department Store does not want to lose its customers to Lotte in Gwanggyo, and is putting much effort into opening at least one boutique for Hermes, Chanel or Louis Vuitton at the branch.

In 2021, its sales soared by 60.9 percent from the opening year of 2020 to reach 601.6 billion won.

“Gwanggyo branch is important to us. We introduced the world's largest Samsung Electronics store there and the number of international luxury brands helped our sales in the town to increase,” a Galleria Department Store official said.

Galleria's prospering business in Gwanggyo adversely affected Shinsegae Department Store's sales in Jukjeon, which is only 7 kilometers away. Shinsegae showed only a 15.2 percent sales increase, which is lower compared to its three rivals.