Foreign tourist spending is emerging as a new growth engine for the domestic department store industry. As Lotte Department Store surpassed 1 trillion won in cumulative foreign sales this year, Shinsegae Department Store and Hyundai Department Store are also eyeing the 1-trillion-won milestone within the year.

However, there are differences in the performance calculation criteria among companies: Lotte Department Store includes sales from outlets and shopping malls, and Hyundai Department Store includes outlet sales, whereas Shinsegae Department Store tallies only pure department store sales.

According to the distribution industry on the 6th, Lotte Department Store exceeded 1 trillion won in cumulative foreign sales this year as of the morning of that day. Having already surpassed last year's annual foreign sales of 734.8 billion won last July, it crossed the 1-trillion-won threshold in 10 months.

Shinsegae Department Store’s foreign sales for January to September this year recorded 850 billion won, more than double compared to the same period last year. Shinsegae expects to break the 1-trillion-won barrier in annual foreign sales for the first time this year.

In particular, the proportion of overseas customers at Shinsegae Department Store’s main branch, located in the Myeong-dong commercial district, grew so high that 1 out of every 3 visitors was a foreigner. Shinsegae's Centum City branch in Busan also saw its foreign sales more than double compared to the same period last year.

Hyundai Department Store’s cumulative foreign sales this year stand at 805 billion won. Foreign sales at The Hyundai Seoul surged by 135% year-on-year, with foreign customers accounting for roughly 1 out of every 4 total visitors.

Amid intensifying competition to secure foreign customers, the role of department stores is also changing. Foreign consumption, which was once centered on luxury shopping, is expanding to content that can only be experienced in Korea, such as K-fashion, K-food, and pop-up stores.

520 Billion Won in Myeong-dong… Consumption Expands to Jamsil and Regional Areas
The epicenter of Lotte Department Store’s foreign sales is Myeong-dong. Approximately 520 billion won in foreign sales was generated at 'Lottetown Myeong-dong,' where Lotte Department Store's main branch is located—accounting for more than half of Lotte Department Store's total foreign sales.

Lotte Department Store is boosting foreign customer inflow through its K-fashion specialty hall, 'Kinetic Ground,' as well as various shopping and cultural events.

Seoul’s Jamsil is also growing as a shopping hub for foreigners. Foreign sales at Lotte Town Jamsil—where shopping and tourist facilities like Lotte World Mall, AvenueL, and Lotte World Tower are concentrated—increased by 100% year-on-year.

Among foreign sales in Jamsil, customers from the Americas and Europe accounted for 35%, up 15 percentage points from 2019. This indicates that consumption has grown not only among Asian tourists from China and Japan, but also among long-haul travelers.

Foreign consumption is also spreading to regional branches. This year, foreign sales at Lotte Department Store branches outside the Seoul metropolitan area expanded to about 2.5 times that of the same period last year. The Busan region surged by 150%, while Honam regions such as Jeonju and Gwangju saw a 100% increase.

Purchased items are also diversifying. Lotte Department Store’s foreign luxury goods sales this year more than doubled year-on-year, and K-fashion sales also doubled. Foreign sales in food halls and restaurants grew by 50%.

Analysts point out that a so-called "dual consumption" trend is emerging, where shoppers purchase high-end luxury items alongside Korean brand apparel and food.

Fierce Competition to Attract Foreigners: Strengthening Memberships and Shopping Benefits
The top three department stores are expanding shopping convenience services and exclusive benefits to secure foreign customers.

Following the cumulative membership reaching 250,000 for the 'Lotte Tourist Membership'—an exclusive membership for foreigners launched late last year—Lotte Department Store is pushing to introduce pre-online registration and unattended issuing kiosks.

Shopping benefits for foreigners are also expanding from Seoul and Busan to regional branches in Daegu, Daejeon, Jeonju, and Pohang. In line with China's National Day holiday, the company is also running food and beverage discount coupons via the Chinese platform 'Dianping' and hosting a gift certificate promotion for UnionPay payment users.

Shinsegae Department Store is holding the 'Shinsegae Global Shopping Festival' across its main, Gangnam, Centum City, and Times Square branches through the 11th. Featuring 120 brands across fashion, beauty, and K-food, it provides exclusive benefits for foreigners such as shopping vouchers and tax refunds.

Hyundai Department Store operates the artificial intelligence (AI) shopping assistant 'Heidi Global,' and last June added a real-time translation feature for customer-staff conversations. Through partnerships with major overseas distribution companies, it also offers foreign VIP customers the same benefits as domestic VIPs.

Jeong Hyun-seok, CEO of Lotte Department Store, stated, "Foreign customers who want to experience K-culture and Korea's lifestyle have established themselves as core customer groups for department stores. We will strengthen differentiated shopping experiences and content to grow into a global department store representing South Korea."

[Copyright (c) Global Economic Times. All Rights Reserved.]