Department Store Sales Joy and Sorrow Divided by ○○○○

20x Difference Following Luxury Brands
Store Presence Affects Same Commercial Area
Industry Competes to 'Attract Hermes'

[Asia Economy Reporter Seungjin Lee] In 2020, when the novel coronavirus disease (COVID-19) struck, the department store industry saw the "Veblen effect" (where demand increases as prices rise) fully take hold. It was revealed that the presence or absence of "Herm?s," known as the "ultimate luxury brand," caused sales volumes to differ by nearly 20 times.

Fortunes Rise and Fall Depending on Luxury Brand Presence

According to the department store industry on the 13th, last year, Shinsegae Department Store Gangnam Branch, which houses all three major luxury brands (including Chanel and Louis Vuitton along with Herm?s), recorded sales of 2 trillion won, while Lotte Department Store Jamsil Branch posted 1.5 trillion won. Hyundai Department Store Pangyo Branch, which does not have Herm?s but includes Louis Vuitton and others, was the only store in the southern Gyeonggi region to exceed 1 trillion won in sales.

On the other hand, stores without the three major luxury brands showed dismal performance. Lotte Department Store Cheongnyangni Branch, a large-scale store with a mart and cinema, recorded sales of 230 billion won last year, a decline of more than 20% compared to the previous year. Many regional department stores without luxury brands failed to reach 100 billion won in sales. Compared to Shinsegae Gangnam Branch, sales differ by more than 20 times.

Fortunes Differ Even Within the Same Commercial Area

While sales fortunes varied between stores depending on the presence of luxury brands, the key factor was Herm?s. Herm?s is regarded as the luxury brand of luxury brands and symbolizes the prestige of department stores. Currently, only seven stores nationwide have Herm?s: Lotte Jamsil Branch; Shinsegae Main Branch, Gangnam Branch, Centum City Branch, Daegu Branch; Hyundai Department Store Apgujeong Branch; and Galleria Apgujeong Branch.

Even within the same commercial area, fortunes differ depending on whether Herm?s is present. For example, in the Myeongdong area, Lotte Main Branch saw a 15% decline in sales compared to the previous year, while Shinsegae Main Branch experienced slight growth. Both stores were affected by COVID-19 due to their high proportion of foreign tourist sales, but Shinsegae Main Branch, which has Herm?s, attracted domestic customers and avoided sales damage. Despite having Chanel and Louis Vuitton among the three major luxury brands, Lotte Main Branch suffered significant sales impact. This underscores the significant influence Herm?s holds as a luxury brand.

Competition Among the Three Major Department Stores to Attract Herm?s

As a result, the department store industry is fiercely competing to attract Herm?s. Last year, competition between Shinsegae Daegu Branch and Hyundai Daegu Branch was intense. Hyundai Daegu Branch had been the only store in Daegu housing all three major luxury brands, but Herm?s withdrew from Hyundai Daegu Branch in November last year and newly settled in Shinsegae Daegu Branch.

This year, a behind-the-scenes battle between Shinsegae Main Branch and Lotte Main Branch is expected. Lotte Main Branch plans a major renovation in the first half of the year to increase the proportion of overseas luxury brands from around 14-15% to over 20%. According to industry insiders, negotiations to attract Herm?s, which failed during the opening of Avenue L in 2005, are being pursued again. In this case, similar to Daegu, there is a high possibility that Herm?s will withdraw from Shinsegae Main Branch, leading to a tense rivalry between Lotte and Shinsegae over Herm?s. Hyundai Pangyo Branch has also begun efforts to attract Herm?s, aiming to start construction as early as the second half of this year.

This content was produced with the assistance of AI translation services.