"From Luxury to Gourmet: Food Halls Become Department Stores' New Growth Engine"

Offline Experience as the Winning Move Amid E-Commerce Onslaught
Lotte, Shinsegae, and Hyundai Expand Investments in Food Halls

Major department stores in Korea are accelerating the expansion of their 'gourmet platforms' by making food halls a core competitive strength. This strategy represents a shift away from the traditional revenue structure centered on fashion and luxury goods, as department stores look to food and F&B (food and beverage) as key drivers for attracting customers. With e-commerce rapidly expanding into the realms of fashion and luxury, food halls that maximize the value of the offline shopping experience are emerging as a new growth engine for department stores, according to analysts.

As of March 16, the retail industry reports that food hall sales at major department stores have shown steep growth this year. In January and February, Hyundai Department Store recorded a 15.8% year-on-year increase in food hall sales, Shinsegae Department Store saw a 15.6% rise, and Lotte Department Store grew by 10%. Breaking it down by location, the Shinsegae Department Store Gangnam branch experienced a 29.3% surge, while Lotte Department Store Jamsil branch and its main branch posted 25% and 15% growth, respectively.

Within the department store sector, food halls have recently emerged as powerful traffic drivers. Although food accounts for an average of around 10% of total sales at Korean department stores, expanding large-scale food halls is seen as a highly effective way to boost overall sales. In particular, food is considered a category with a high rate of associated purchases that lead to additional spending on other products.

Another strength of food halls is their relative resilience to economic fluctuations. An industry insider explained, "When the economy worsens, luxury spending drops sharply, but consumers often continue to spend on F&B, which is less burdensome. The strategy is to use low-priced F&B as a kind of lead product to increase both visitor numbers and dwell time."

This is also a response to the expansion of e-commerce. Online platforms such as Coupang are quickly broadening their product ranges to include high-priced items like fashion and luxury products, intensifying competition with department stores. However, fresh food and F&B are still regarded as areas where offline stores maintain a competitive edge. This is because aspects such as checking the quality of ingredients in person and enjoying gourmet experiences on-site are difficult for online delivery services to replicate.

The demographic of food hall visitors has also widened compared to the past. Once perceived as spaces for a select group of consumers purchasing premium ingredients, department store food halls now attract a much broader customer base. The expansion of value-for-money home meal replacements (HMR), a greater variety of trendy dessert brands, and the introduction of international ingredients have turned these food halls into spaces where people enjoy browsing for entertainment.

Shinsegae Department Store Gangnam Branch Food Hall 'Shinsegae Market'. Shinsegae Department Store

Accordingly, department stores are reimagining food halls not just as places to buy groceries, but as 'gourmet cultural spaces.' The strategy is to turn the food hall itself into a content-driven attraction, similar to 'The Food Hall' at Harrods in London or 'Le Gourmet' at Galeries Lafayette in Paris. In Korea, Galleria Department Store's 'Gourmet 494,' launched in 2012 in the basement of its Apgujeong luxury branch, is cited as a leading example of a premium food hall. Another is The Hyundai Seoul in Yeouido, which gathered over 90 F&B outlets in a food hall spanning about 14,800 square meters, resulting in significant customer traffic.

Major department stores are currently strengthening their food hall competitiveness through large-scale projects. Shinsegae Department Store is expanding its Gangnam branch food hall. Last year, it opened a new premium delicatessen, and previously launched 'Sweet Park,' 'House of Shinsegae,' and 'Shinsegae Market,' culminating in the country's largest food hall spanning about 20,000 square meters.

Lotte Department Store Incheon Branch Future-Oriented Premium Food Hall Lepisserie. Lotte Department Store

Lotte Department Store has introduced the 'Lepisserie' food hall brand under its 'New Premium' strategy. It operates at five key locations, including the Incheon branch, main branch, and Dongtan branch, with plans to expand to core stores by 2027. Lepisserie will also be featured at the Nowon branch, scheduled to open in the second half of this year, and at the Jamsil branch, set for completion in 2027.

Hyundai Department Store is also enhancing its food hall competitiveness. It renovated the food hall at its Apgujeong main branch to create the premium dining area 'Gastro Table,' and established the 3,339-square-meter 'Food Park' F&B specialty area at its Jungdong branch. Recently, it has also focused on securing rare ingredients, such as beginning 100% pure-bred wagyu beef sales at food halls in the Apgujeong main branch, Trade Center branch, and Pangyo branch.

Industry experts predict that 'food hall content' will likely become the key to future department store competitiveness. Another industry insider commented, "Food halls are playing a role in attracting not only domestic customers but also foreign visitors who are interested in K-food. Ultimately, department stores with strong food halls will secure a competitive edge in total sales."

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