Retail Sector Strengthens Offline Presence Again Amid 'With Corona' Expectations

Department Stores Actively Hold Events During October Substitute Holiday Weekend
Warehouse Discount Stores Also Growing Amid Spread of Cost-Effective Culture

After losing ground to e-commerce and online platforms following the spread of COVID-19, retailers are now regrouping their offline operations in line with the 'With Corona' atmosphere.

Department Stores Seeking Transformation

According to the Ministry of Trade, Industry and Energy's "Major Retailers' Sales Trends for August 2021" released on the 1st, sales at major department stores in August increased by 13.0% compared to the same period last year. This was due to consumer sentiment, which had been subdued by the prolonged pandemic and strengthened social distancing measures, significantly recovering this year in conjunction with revenge spending, with consumption focused on overseas luxury goods and fashion.

Although the daily number of confirmed cases still exceeds 2,000, raising concerns about further COVID-19 spread, department stores expect the full-fledged 'With Corona' atmosphere to spread from mid-month as vaccination rates increase. They anticipate many customers will visit nearby department stores or outlets during the substitute holiday period from the 2nd to the 4th and plan to expand consumption by promoting various events.

In the mid to long term, department stores are aiming to renew their spaces store-by-store, transforming them into culture- and experience-oriented areas where customers visit not just for shopping but to spend time.

For example, Lotte Department Store has renewed its Nowon, Guri, and Daegu branches earlier this year and is currently renovating its main, Jamsil, and Gangnam branches. The Dongtan branch, which opened in August, and the Gyeonggi Uiwang Premium Outlet, opened in September, have incorporated cultural and artistic elements along with various food and beverage outlets to maximize the time customers spend there.

Hyundai Department Store has also created indoor and outdoor landscaping spaces on the 7th floor of its Mokdong branch this year and is sequentially renewing parts of its Apgujeong Main Branch and Trade Center Branch. In particular, the Apgujeong Main Branch is expanding its men's specialty section featuring overseas luxury brands such as Louis Vuitton, Prada, Gucci, and Balenciaga, aiming to attract affluent male customers in their 30s and 40s.

Warehouse-Style Discount Stores Gaining Popularity Again

Large marts such as E-Mart, Lotte Mart, and Homeplus are focusing on expanding warehouse-style discount stores instead of traditional offline stores. This is based on the judgment that warehouse-style discount stores will continue to grow as a cost-conscious consumer culture has spread since the COVID-19 outbreak. In fact, while the profitability of existing offline stores has declined, the performance of warehouse-style discount stores has improved. According to Lotte Mart, the sales growth rate of its warehouse-style discount store VIC Market remained in the single digits from 2015 to 2019 but reached the 20% range last year.

E-Mart plans to open five additional Traders warehouse-style discount stores by 2025. Lotte Mart will convert its Mokpo, Jeonju Songcheon, and Gwangju Sangmu branches into VIC Market warehouse-style discount stores early next year and expand to more than 20 stores by 2023. Homeplus plans to convert 10 stores nationwide into Homeplus Special warehouse-style discount stores by the end of this year.

Large marts and Super Supermarkets (SSMs), whose locations have decreased, are seeking differentiation through specialized stores and nearby delivery services. Last month, Lotte Mart opened 'Collioli,' a pet specialty store, at its Eunpyeong branch, offering various pet care and management services such as hospitals and grooming salons. SSMs have entered the quick commerce competition based on stores with excellent residential accessibility. Currently, all companies including Lotte Super, Homeplus Express, GS The Fresh, and E-Mart Everyday operate instant delivery services.

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