[Retail Revolution] No Staff, No Inventory... A Department Store With Many 'Nothings' Is Rising

Stores Without Inventory, Product Displayed by Size... Purchase After Trying On via App
Staffless Stores, Automatic App Payment When Taking Products
Industry Focuses on 'New Experience'... Stimulating MZ Generation's 'I've Tried It Too' Psychology

It takes only 15 seconds from ordering to payment while lying at home. There is no denying that we are now in the era of online consumption. Initially, there was widespread anticipation that people would no longer drive to department stores or large supermarkets, spending expensive fuel, just to buy 'that product also available on Coupang' that arrives at their doorstep with just a few clicks. Facing a survival crisis triggered by online channels, traditional offline distribution channels hurriedly embarked on digital transformation while simultaneously focusing on a complete overhaul into 'offline stores like never before.' As a result, those who used to visit department stores with a clear purpose, such as 'to buy luxury clothing to wear to a friend's wedding,' have changed to visiting department stores as 'a date spot for this weekend.' At supermarkets, where people used to go with a full cart for serious shopping, it has become common to see family visitors pushing strollers, entrusting fresh fish preparation, and heading to the in-store kids' caf?. Instead of rushing to grab a cup of instant noodles for a quick meal at convenience stores, customers now handle banking tasks and rent useful lifestyle 'it items' like the Dyson Airwrap. This structural change in offline channels, which are making themselves destinations rather than mere transit points, marks the maturing of the 'retail revolution.' We examine what 'reasons to visit' these channels have filled in.

[Asia Economy Reporter Kim Yuri] The battle for 'destination' status in the department store industry has ignited. Department stores are evolving from mere transit points where customers stop to purchase necessary products into 'leisure spaces to stay and enjoy' that are destinations in themselves. The era when simply displaying high-end products common to any department store guaranteed competitiveness is over. To be chosen in the destination competition, stores must discover trending products 'not available on Coupang' and incorporate new experiences that stimulate the MZ generation's (Millennials + Generation Z) 'I tried it too' mentality, sparking their desire to visit. Providing attractions such as parks, exhibition halls, and science museums to make visits healing and enjoyable is an added bonus.

The reason why department stores with 'many things missing,' such as 'stores without product inventory' or 'stores without staff,' are gaining popularity is directly linked to this 'new experience.' A representative example is '#16,' a clothing store on the 3rd floor of Lotte Department Store Dongtan Branch. Since its opening in August last year, it has been a popular store ranking high in women's clothing sales, with a steady flow of customers in their 20s and 30s. Its distinctive feature is that it is a 'store without inventory,' a collaboration between Lotte Department Store and the online fashion platform 'Hago.' Here, products from 16 popular domestic designer brands favored by the MZ generation are displayed with one item per size. Customers try on clothes and bags directly, and instead of asking staff for 'new products,' they open their phones. They scan the product barcode using the 'OrderHago' application to place orders. Customers can order online while resolving 'size concerns' that were difficult to address on online sites, without worrying about staff reactions. For #16, this reduces inventory management burdens and allows more products to be showcased in the space. The department store attracts MZ generation customers, making it a mutually beneficial initiative. Following the success of the 'store without inventory,' Lotte Department Store plans to add five more locations this year and expand to about 20 stores within two years.

The 'Uncommon Store' on the 6th floor of The Hyundai Seoul is a 'store without staff.' It is also very popular among customers in their 20s and 30s, with weekend waiting numbers reaching the 300s. After entering the store using the department store app, customers pick up products and leave, with automatic payment processing. The 33㎡ store is designed in orange color to be 'Instagrammable' and is filled with groceries, stationery, and other items that appeal to the MZ generation. Forty AI cameras on the ceiling analyze customer movements to determine purchase intent, enabling the new experience of 'just picking up items and leaving with automatic payment.' These new experiences spread rapidly through social networking services (SNS), igniting the desire of other MZ generation members to join the 'I tried it too' trend.

Shinsegae Department Store Gangnam Branch has no 'luxury boutiques' on its first floor. After a renovation last July, the entire first floor was filled with cosmetics and became a huge success. It opened the largest luxury cosmetics specialty hall in Korea, gathering over 50 brands in one place, including seven new beauty brands such as Poare, Swiss Perfection, Givenchy, Gucci Beauty, and Laura Mercier, becoming a 'mecca for cosmetic enthusiasts.' As a result, from July 27 last year to the end of February this year, cosmetics sales at the Gangnam branch rose 20% compared to the same period the previous year. The total number of purchasing customers also increased by 10%. With masks becoming essential due to COVID-19, perfumes gained attention over color cosmetics, and the perfume category, including Diptyque and Byredo, grew 33% during the same period.

Spending just a few of these 'new experiences' can take three to four hours, with hands full of purchased products. Department stores rapidly update content to extend customer dwell time. The method of quickly introducing emerging brands among trendsetters in the form of 'pop-up stores' has become established for this reason. Due to these changes, the sales share of customers in their 20s and 30s at Lotte, Shinsegae, and Hyundai Department Stores increased to 35.9%, 41.2%, and 43.4%, respectively, last year.

Experts predict that new experiments and attempts breaking the traditional formulas of department stores will expand further. Professor Seo Yong-gu of the Department of Business Administration at Sookmyung Women's University said, "In terms of increasing customer dwell time, competitors are not only e-commerce and other online channels but also cultural content such as online video services (OTT) that occupy customers' leisure time." He added, "It will develop in a direction that secures additional content that can provide satisfaction with new information, fun, and relaxation beyond OTT viewing."

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