What: South Korea's largest retailers initiate multibillion-won transformation of Myeong-dong stores, with Lotte emphasising Korean culture and Shinsegae focusing on luxury expansion.

Why it is important: The contrasting approaches of Lotte and Shinsegae demonstrate how legacy retailers are reinventing themselves to attract both luxury and youth markets, reflecting the broader polarisation in Korean retail where successful stores achieved 5% growth while others declined by 3.3% in 2024.

South Korea's retail giants Lotte and Shinsegae are engaged in an intense competition to dominate Seoul's Myeong-dong district through ambitious renovation projects of their flagship stores. Lotte Department Store's transformation includes shuttering its Young Plaza for its first major overhaul since 2003, creating a dedicated zone for trendy Korean products targeting Gen Z global shoppers. The company's broader vision encompasses upgrading its main flagship store, which has been ongoing since 2019, including luxury fashion zones, gourmet food halls, and the country's largest department store beauty hall.

Meanwhile, Shinsegae is pursuing its largest makeover in 12 years, focusing on expanding its luxury portfolio and premium dining options. The strategy includes transforming a former bank building into a luxury boutique centre. The competition reflects their market positions, with Lotte's Myeong-dong branch generating 2.05 trillion won in annual revenue, ranking fourth nationwide, while Shinsegae's store achieves 1.19 trillion won, placing tenth.

This rivalry exemplifies the broader trend in retail, where creating unique offline experiences has become crucial for competing with e-commerce platforms.

IADS Notes: The Myeong-dong competition emerges amid significant market changes, as revealed in January 2025 data showing department store growth falling below 1%. This challenging environment has prompted innovative responses, with Shinsegae's "House of Shinsegae" concept achieving 149.9% sales growth in June 2024 through luxury experiences. Meanwhile, Lotte's October 2024 announcement of a 7 trillion won investment plan demonstrates their commitment to modernisation. The strategic importance of these developments is underscored by February 2025 data showing Myeong-dong's remarkably low 4.4% vacancy rate compared to other retail districts, highlighting the area's resilience and potential for growth.

Landmark war in South Korea’s Myeongdong: Lotte, Shinsegae face off in flagship showdown