Lotte to close fashion mall in Dongdaemun
China's First Lady Peng Liyuan visits Lotte FITIN in Dongdaemun, Seoul, in this 2014 file photo. / Yonhap
By Kim Jae-heun
Lotte Asset Development will close its shopping center Lotte FITIN Dec. 31, due to the fashion business slump in the area and the COVID-19 pandemic.
Lotte's real estate firm has been operating the mall for seven years and it once was one of the most popular stores for foreign tourists, with over 50 percent of its sales coming from foreigners.
“Due to the economic damage caused by the COVID-19 pandemic, the majority of clothing brands in the mall are currently leaving. We've decided that it is better to close down the building because of the lack of operational efficiency,” a Lotte Asset Development official said. “However, we have some time left until the contract expires and we are discussing the future of this mall.”
Lotte opened Lotte FITIN in May 2013 to offer experiences relating to hallyu, or the Korean wave, in Dongdaemun Market, which received many international tourists. Chinese, in particular, accounted for 80 percent of foreign visitors.
However, the number of Chinese tourists fell drastically in 2015 and with more and more people starting to shop online, Dongdaemun lost its competitive edge as a fashion hub in the country.
The government initiated a new project to revive the area but it proved unsuccessful.
In 2019, the Seoul Metropolitan Government opened the 24-hour tailor shop named Within 24 in collaboration with the Ministry of Trade, Industry and Energy on the second floor at Lotte FITIN. However, only 400 items were sold there from April to December, which means the shop sold an average of less than two items a day.
This year, business worsened due to COVID-19 as travel bans between countries cut off all the tourists to the shopping mall. Clothing shop owners left the mall feeling the burden of fixed costs such as store rental fees and wages.
According to statistics by the Korea Real Estate Board, the vacancy rate for large and medium-sized shopping malls in Dongdaemun rose 4.5 percentage points from 7.3 percent in the fourth quarter of last year to 11.8 percent in the third quarter of this year.
Meanwhile, Lotte Asset Development, the consignment operator of the shopping mall, also reduced its size as it faced difficulties due to the pandemic.
It transferred its shopping center businesses in Korea and abroad to Lotte Shopping while handing over asset management and office sharing services to Lotte Property & Development. Lotte Engineering and Construction will manage Lotte Group's residential real estate business.