Recent market shares of major department stores have shown a mixed pattern over the past five years. Despite a decline in market share, Lotte Department Store maintained its first place. Shinsegae Department Store had the highest growth rate in market share.
According to related industries on the 18th, the market share of department stores based on total sales of Shinsegae Department Store in 2020 was around 25%. The market share for 2024 increased by 3 percentage points to 28%. Lotte Department Store fell 3 percentage points from 37% in 2020 to 34% in 2024. Hyundai Department Store also decreased by 1 percentage point from 28% to 27%. With Lotte Department Store maintaining its first-place share, Shinsegae Department Store and Hyundai Department Store are in a seesaw battle.
These figures were presented in an investment report following the issuance of 200 billion won worth of unsecured bonds by Shinsegae Co., which operates Shinsegae Department Store. The department store sector continues to experience an oligopoly with the three companies: Shinsegae Department Store, Lotte Department Store, and Hyundai Department Store, while Hanwha Galleria has shown signs of being effectively marginalized.
In the actual investment report, there was no mention of Hanwha Galleria, once known as the 'small but mighty department store' thanks to its luxury store. Shinsegae Co. analyzed that the market shares of the three department stores would reach 89% by the end of 2024, indicating an oligopolistic structure.
As Shinsegae's market share increases, its competing department stores are reshaping their management strategies. Lotte Department Store is responding to market changes in two ways: continuing to invest in key stores in Seoul and the metropolitan area, such as the Jamsil branch and Myeongdong flagship store, while considering the sale of underperforming provincial stores. Its mid- to long-term growth strategy has been defined around the future-oriented complex shopping mall 'Time Villus.' Lotte Department Store plans to invest 7 trillion won to increase the number of Time Villus locations to 13 by 2030.
Hyundai Department Store is promoting a strategy to establish its flagship stores as landmarks, exemplified by the expansion of stores like 'The Hyundai Seoul.' The Hyundai Seoul, which opened in Yeouido, Seoul, in February 2021, achieved annual sales of 1 trillion won just 33 months after opening. The Hyundai Seoul is characterized by its ambition to be a must-visit space for the MZ generation (those born between 1981 and 2010). In line with changing times, it is also enhancing its function as a tourist attraction sought by foreign visitors. According to Hyundai Department Store, as of last year, foreign tourists from 156 countries visited The Hyundai Seoul and from 132 countries visited the Gangnam Trade Center store.
Hanwha Galleria appears to be focusing more on expanding its food and beverage business than on its core department store operations. A notable example is the burger franchise Five Guys, which opened its first store in Gangnam, Seoul, in June 2023. Five Guys has expanded to seven stores in the last two years. Recently, it also introduced its first location of the premium ice cream brand 'Benson,' named 'Benson Creamery Seoul.'
A food service industry official noted, 'Hanwha has recruited many talents with successful experiences in the food and beverage industry and is preparing around ten restaurant brands.' He added that it seems they are looking to revamp the business atmosphere through their food and beverage operations rather than relying solely on sales growth from luxury-centric department stores.
However, with recent rumors about a possible sale of Five Guys, speculations have arisen regarding a potential shift in Hanwha's strategy. Hanwha Galleria stated through a clarification announcement on the Financial Supervisory Service's electronic disclosure system the previous afternoon, 'We are reviewing various options with the global headquarters regarding enhancing the brand competitiveness of Five Guys, but no direction has been decided yet.'