COVID-19 has struck the local retail market hard, resulting in the worst-ever business performance for all top three players.
Department stores of Lotte, Shinsegae, and Hyundai are applying different countermeasures to overcome the global economic crisis. Shinsegae reported an operating loss of 43.1 billion won ($36.37 million) in the second quarter this year. This is the first time the department store operator has reported losses since separating from E-mart in 2011.
Lotte Shopping and Hyundai Department Store generated operating profits of 1.4 billion won and 8.1 billion won, respectively, falling over 80 percent compared to the numbers in last year’s second quarter.
All three players made profits close to 100 billion won between April and June last year, but the COVID-19 pandemic brought it down starting in January. Sales coming from various sectors, including the main business of department and discount stores as well as duty-free shops fell drastically.
Shinsegae and Hyundai’s department store units recorded respective losses of 37 billion won and 18.1 billion won in the duty-free sector in the second half of this year and Lotte’s discount store made a 57.8 billion won deficit in the same period.
Shinsegae’s E-mart, the largest retailer in the country, had an operating loss of 47.4 billion won, increased by 17.5 billion won from that in the second half of last year when the company went into the red for the first time in its history.
Recommended Korea Tour Packages
All three players are expecting a rebound in their department store businesses in the third quarter as the COVID-19 situation improved to bring the number of customers back starting in June.
Hyundai has been the most aggressive among the three in strengthening its department store sector. It opened a premium discount outlet in Daejeon in June and plans to open another one in November in Namyangju, Gyeonggi Province. Early next year, Hyundai will open a department store on Yeouido, Seoul, which will become the largest one to operate in the capital city, spanning 90,000 square meters in size.
Shinsegae will focus on its large stores in Gangnam and Myeong-dong while reshuffling its unprofitable cosmetic and fashion firms. The company plans to secure more retail channels for online business in China. For its duty-free business, Shinsegae wants to expand some of its shops while renegotiating the rental fees for its stores at Incheon International Airport in an attempt to keep them going.
E-mart will revamp its branches across the country centering around the grocery sector that customers can come and experience in person.
Lotte, on the other hand, has been putting massive investments into its online business while closing down many of its discount stores. Lotte said it will shut down 30 percent of its overall retail stores in the country as part of the group’s biggest restructuring since its establishment in 1979.
Source: The Korea Times