SEOUL, Nov. 30 (Yonhap) — South Korea’s three leading department store operators will not open new branches in the next two years as local consumers increasingly opt for online shopping, industry sources said Thursday.
Lotte, Hyundai and Shinsegae, which account for 80 percent of the department store market in South Korea, have no plans to open new outlets in 2018 or 2019, according to the sources.
Industry watchers say it has become very difficult for local retailers to open new branches due to more consumers shopping online and the government’s strengthening of regulations to protect mom-and-pop stores.
“I think the time where department stores post growth by opening new branches has come to an end,” a retail industry source said. “It is now about whether we should close down the ones already under operation, not whether to open a new one.”
The overall sales of 13 offline retailers advanced 2.5 percent on-year in October, but department stores backtracked 3.7 percent, according to data compiled by the Ministry of Trade, Industry and Energy.
The number of E-Mart stores, South Korea’s largest big-box discount chain operated by Shinsegae, also shrank in the country to 145 from 147 last year, according industry sources. It marks the first time the number has declined since it opened South Korea’s first discount chain in 1993.
Meanwhile, the strong growth of mobile channels helped sales via online malls continue to rise.
In September, online transactions reached a record high value of 6.8 trillion won (US$6.3 billion), up 27.6 percent from a year earlier, according to data from Statistics Korea.