Lotte Shopping will close the Lotte Factory Outlet Gasan branch in the second half of this year. This marks the company's 17th outlet store opening in January 2016, which is set to close for the first time in over a decade.
According to the retail industry on the 16th, Lotte Shopping decided to end operations as of September 30 due to the expiration of the lease agreement with Eugene Asset Management, the landlord of the Factory Outlet Gasan branch. It is reported that Lotte Shopping notified the tenants of this closure plan at the end of last month.
Opened in January 2016 in the Gasan-dong outlet complex in Geumcheon-gu, Seoul, the Lotte Factory Outlet Gasan branch claimed to be "a factory-style outlet that is cheaper than conventional outlets," showcasing inventory from famous brands over two years old at discounts of 40-80%.
Initially, it received a positive response, but mid-range shopping has shifted online to platforms like Musinsa, while high-end brand shopping and experiential consumption were dispersed to large outlets in Paju and Yeoju, leading to a decline in its market presence. According to industry sources, the Gasan branch's sales last year were 22.1 billion won, a decline of 9.4% from the previous year. This is the lowest among the 22 outlets operated by Lotte Shopping. Lotte Shopping also considered ceasing operations at this branch in 2019 but ultimately decided against it.
A representative from Lotte Shopping explained, "As the lease agreement expires this year, we decided not to extend the contract after reviewing various situations."
Along with the trend of streamlining stores among major retailers, the number of closures of shopping facilities such as department stores and outlets is increasing. Last year, the Lotte Department Store Masan branch, NC Department Store Busan Seomyeon branch, and 2001 Outlet Guro branch ceased operations. This year, the Ilsan Grand Department Store, Hyundai Department Store D-Cube City branch, and Newcore Outlet Incheon Nonhyeon branch have also closed.
City duty-free shops are no exception. Last January, Shinsegae Duty Free's Busan Centum City branch ended operations, and the Dongdaemun Hyundai Duty Free shop is expected to close at the end of this month.
This trend is expected to continue in the future. As the shift towards megastores or complex shopping malls becomes more pronounced, restructuring of underperforming department stores is likely to accelerate.
Amid the struggles of offline stores, property owners are also shifting the use of buildings from retail to office facilities. Both NC Department Store Seomyeon branch and D-Cube City Hyundai Department Store have closed for this reason. The owners of D-Cube City, IGIS Asset Management, plan to attract a city-style shopping mall called Starfield Village after a renovation.
The Lotte Department Store Bundang branch has also recently received approval for a conversion to office space from its owner IGIS Asset Management and has entered the sale process. Lotte had operated this branch on a leaseback arrangement after selling it in 2010.
However, the decision on whether to cease operations at the Bundang branch has not been finalized. A representative from Lotte Shopping stated, "The store's lease term still has time left," adding, "Even if the department store building is sold, operations can continue based on discussions."