[Coupang Changed the Distribution Map] Department Stores Betting on 'Popup Stores'

③Department Stores Focused on High-Income Groups

Shinsegae Collaborates on Art Prints and Bags
The Hyundai Seoul Presents Slam Dunk
Lotte Opens Metro Tennis and More
Aiming to Attract Middle Class and MZ Generation

Shinsegae Department Store showcased bags from the Belgian luxury brand 'Delvaux,' featuring designs inspired by the works of Belgian surrealist painter Ren? Magritte, through a pop-up store last month. This was the 'Magritte Capsule Collection,' launched exclusively in Asia by Delvaux to commemorate the 125th anniversary of Ren? Magritte's birth. For the pop-up, Shinsegae transformed the central space, The Stage, into an exhibition resembling a Ren? Magritte art show. This sales strategy was evaluated as a way to increase consumer engagement by blending luxury goods with cultural and artistic content.

The Hyundai Seoul in Yeouido, Seoul, opened a pop-up store for the Japanese animation 'Slam Dunk' earlier this year. Despite subzero temperatures, about 1,000 fans eager to purchase limited-edition figures and uniforms created a spectacular scene by rushing in immediately upon opening, known as an 'open run.' A Hyundai Department Store official said, "To enhance the attraction of MZ generation (Millennials + Generation Z) customers, it is important to present content that feels new," adding, "We estimate that about 20,000 customers visited during the 13-day event period."

The popular Japanese animation 'Slam Dunk' pop-up store showcased at Popup Iconic on the B2 floor of Hyundai Department Store The Hyundai Seoul. Customers began lining up a day before the event, and the industry estimates that around 20,000 consumers visited during the 13-day event period.
[Photo by Hyundai Department Store]

Coupang's growth has also brought changes to the sales strategies of traditional department stores. In the past, department stores mainly targeted the middle class and above, dealing primarily in luxury goods and other high-end consumer products. However, e-commerce companies like Coupang have rapidly penetrated this sector by emphasizing fast delivery, causing the market share to shrink sharply. From the department stores' perspective, the environment now demands locking in existing customers while attracting new consumer segments to survive.

The new sales strategy that department stores have adopted to counter the growth of the online market, represented by Coupang, can be summarized as discovering and hosting new trending brands and integrating specific content. The aim is not just to sell products but to transform into spaces where consumers can enjoy leisure through the incorporation of cultural content. While the pursuit of experiential spaces is similar to large supermarkets, the nature is distinctly different. Large supermarkets cater to the general public with groceries and daily necessities, whereas department stores primarily serve the middle class and above, focusing on luxury and high-end goods. This structural difference inevitably leads to variations in content. A department store industry insider said, "Most customers visiting department stores have a certain level of income," adding, "We strive to present content that meets the expectations of this customer base."

Shinsegae Department Store teamed up with global entertainment lifestyle platform company 'HYBE' to present the group SEVENTEEN's 'Artist-Made Collection by SEVENTEEN' popup at The Stage in Gangnam.
[Photo by Shinsegae Department Store]

Lotte Department Store's introduction of 'London Bagel Museum,' 'Mardi Mercredi,' and 'Tennis Metro' at Lotte World Mall in Jamsil, Seoul, this year is part of this strategy. These are all premium brand stores introduced for the first time by a domestic retailer, yielding significant first-mover advantages. A Lotte Department Store official said, "These stores caused a sensation at their opening with open runs and sell-out crazes among both domestic and international customers," adding, "They continue to attract long lines in front of the stores, maintaining their popularity."

Pop-up stores are being used to attract new consumer segments. Most of the content targets the MZ generation, which has been lost to online markets like Coupang. Representative examples include the webtoon 'Demotjuk (a disease where one dies if they don't debut)' pop-up store and the Lego BTS Dynamite pop-up store held by Hyundai Department Store's The Hyundai this year. An industry insider said, "Until a few years ago, pop-ups were merely temporary stores selling event products in unused department store spaces, but recently, as the effect of attracting MZ generation customers has been proven, pop-ups are being placed in major locations with high foot traffic."

These strategies seem to work temporarily, but it is uncertain how long their effects will last. This is because challenges from Coupang and others are accelerating in sectors such as luxury goods, which were traditionally dominated by department stores. In fact, since July, Coupang has been operating 'Rocket Luxury,' which delivers luxury cosmetics the day after ordering. Although currently limited to cosmetics, there is a possibility that the category will expand in the future. The ongoing high inflation and economic downturn have dampened consumer sentiment, causing stagnation in sales of luxury goods, fashion, and accessories, which have driven the quantitative growth of department stores, adding another variable to the situation.

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