South Korean department stores are changing to compete with e-commerce

SEOUL, July 2 (Korea Bizwire) – To differentiate themselves from online shopping platforms, South Korean department stores are undergoing significant transformations, focusing on experiential retailing, premium offers and attracting younger customers.

At Lotte Department Store in Jamsil, Seoul, the audio section on the 10th floor now has three listening rooms. Global audio brands Geneva and JBL Luxury, which entered the store earlier this month, have their own listening rooms. Bowers & Wilkins, which arrived in December, also has a dedicated space.

Together, the three brands occupy a premium audio complex covering approximately 330 square meters, enabling customers to enjoy high-end sound systems in a home-like environment.

The trend extends beyond audio gear. Last September, dozens of eager shoppers lined up 90 minutes before the Shinsegae Department Store opened in Gangnam, Seoul. The excitement was building when Emis, an emerging fashion brand popular with young consumers, debuted. The brand’s coveted hats sold out on the first day.

Department stores are focusing on differentiating themselves on e-commerce platforms, according to industry insiders. That strategy includes creating experiential spaces and strengthening food and drink offerings, as well as attracting fashion brands that primarily serve teens and twentysomethings through online channels.

As part of this shift, individual store spaces in department stores are becoming larger. The main Lotte Department Store in Seoul is undergoing its most extensive renovation since it opened in 1979.

The men’s fashion floor has been transformed into an international men’s fashion zone, reducing the number of brands on the floor but increasing the space for each brand. This creates a more spacious shopping environment.

Lotte has also introduced unique experiential spaces. In early May last year, a 500-square-meter tennis store with a real tennis court opened in Lotte World Mall.

Lotte Department Store said: “Experiential stores are a competitive advantage that can’t be replicated online. We expect to see more of these hybrid spaces combining products and experiences in the future.”

Hyundai Department Store has also embraced the trend. In March, it renovated the kids’ section on the fifth floor of its The Hyundai Seoul location to create Epic Seoul, a 730-square-meter pop-up space equivalent to about 10 clothing stores.

The area is home to various pop-up shops and serves as a place for shoppers to relax. A Hyundai Department Store representative explained: “Recent department store renovations have focused on allocating large spaces to create diverse spatial competitiveness rather than increasing the number of sales floors. These unique spaces can change the store’s image and attract younger customers as they become popular places to take ‘evidence’ photos.

Department stores are also actively courting younger consumers, particularly those of Generation MZ (born between the early 1980s and early 2000s). The fashion category, a key product group for department stores, is undergoing significant changes with the rise of Korean designer brands.

Shinsegae department store has created special sections dedicated to young fashion brands in its branches in Centum City (Busan) and Gangnam (Seoul).

The New Street section of the Gangnam store, which opened last September, carries popular domestic brands such as Wooalong and Birthdaysuit. These are the first items in the department store.

Within three months of opening, 84% of visitors to New Street were new customers.

Lotte Department Store also followed suit, introducing brands such as Ader Error to its Lotte World Mall store last June. It was the brand’s first appearance in a department store in the Seoul metropolitan area.

They also welcomed Mardi Mercredi, one of the popular K-fashion brands “3 Ma” (along with Matin Kim and Maison Marais). This store has become a top-selling destination for foreign tourists at Lotte World Mall.

A Shinsegae Department Store representative noted, “By renovating our youth fashion departments and introducing numerous K-fashion brands, we were able to attract demand for youth fashion that had been concentrated online for years. This helped us secure future customers by attracting younger generations who had not previously visited department stores.”

Food courts and delis are other areas of focus for department store renovations. The Gangnam branch of Shinsegae Department Store recently opened Sweet Park, the country’s largest dessert hall, in February.

In early March, the store unveiled a premium food hall called House of Shinsegae near the JW Marriott Hotel. The supermarket and deli sections are also undergoing renovations.

Competition to attract popular restaurants is fierce. The Lotte Department Store branch in the World Tower became the first department store to host the London Bagel Museum last August, attracting more than 150,000 visitors a month.

Galleria Department Store has brought ChaPanda, a premium milk tea brand from China that sells more than 1 billion cups a year, to its luxury goods store in Seoul. Shinsegae Department Store plans to bring Intelligentsia, a well-known American coffee brand, to its main branch, joining Blue Bottle and Stumptown.

A Lotte department store representative said: “Since the opening of the London Bagel Museum, overall sales on the same floor have increased by more than 30% compared to last year, demonstrating the effectiveness of these changes.”

Ashley Song ([email protected])