Lotte World Mall Jamsil (Image courtesy of Lotte Shopping)
SEOUL, Jan. 8 (Korea Bizwire) — South Korea’s department store industry showed stagnant growth of less than 1% last year, with the disparity between high-performing and struggling stores becoming increasingly pronounced.
According to industry data released on January 7, the five major department store chains – Lotte, Shinsegae, Hyundai, Galleria, and AK – recorded combined sales of 39.82 trillion won across their 68 stores in 2024, representing a mere 0.9% increase from the previous year’s 39.43 trillion won.
This marks a dramatic slowdown for the industry, which had enjoyed robust growth exceeding 10% in both 2021 and 2022, driven by post-COVID revenge spending. Growth had already decelerated to 1.7% in 2023 before falling below 1% last year, largely due to weakened consumer sentiment amid high interest rates and inflation.
Among the major players, Lotte maintained its market leadership with sales of 13.83 trillion won (34.8% market share), followed by Shinsegae at 12.63 trillion won (31.7%) and Hyundai at 9.45 trillion won (23.7%). Galleria and AK placed fourth and fifth with 2.80 trillion won (7.0%) and 1.09 trillion won (2.7%) respectively.
Only Lotte and Shinsegae managed to increase their sales compared to the previous year, growing by 1.2% and 3.7% respectively. The other three chains saw declines, with Hyundai dropping 0.2%, Galleria 3.8%, and AK 9.3%.
Shinsegae Gangnam (Image courtesy of Shinsegae)
The polarization between stores has become particularly stark. While major outlets in the Seoul metropolitan area and major cities showed growth, most regional stores experienced sharp declines. Twelve stores achieved sales exceeding 1 trillion won, but apart from Shinsegae Centum City, Shinsegae Daegu, and Lotte’s Busan main branch, all these high-performing stores are located in the Seoul metropolitan area.
In contrast, the remaining 56 stores saw their sales decline by 3.3% to 18.71 trillion won. More than 80% of these stores – 45 outlets, mostly located in smaller regional cities – experienced negative growth. Thirty-six stores reported declining sales for the second consecutive year.
Industry experts predict this polarization between metropolitan and regional stores will persist. Some observers suggest that in regions outside the Seoul metropolitan area, where consumer spending power is weaker, only one dominant department store per area may ultimately survive.
“There’s a vicious cycle where major brands increasingly prefer top-performing stores, which in turn further concentrates sales in these locations,” said an industry insider. “Regardless of the company, we may see accelerated restructuring of regional stores through sales, closures, or business conversions.”
Ashley Song (ashley@koreabizwire.com)
