“Tapping Overseas With K-Brands Instead of Stores: Department Stores' Revamped Global Strategy”

Three Major Department Stores Transform into Export Platforms for K-Fashion and Beauty
Shifting from Direct Store Openings to Expanding Pop-Up and Flagship Spaces
Minimizing Risks While Boosting Brand Value and Fee-Based Revenue

The department store industry, having hit the limit on new store openings, is seeking breakthroughs overseas. Instead of building large-scale local branches at the cost of hundreds of billions of won, they are now focusing on developing platform businesses that support the overseas expansion of K-fashion, beauty, and F&B brands. By leveraging local distribution networks to foster Korean brands, companies aim to reduce investment risks while improving profitability.

According to the retail industry on July 27, the three major department stores—Lotte, Shinsegae, and Hyundai—have recently opened popup stores and flagship stores in key Asian markets, with a particular focus on Japan. Rather than directly operating department stores abroad, these companies have shifted their strategy to supporting the overseas expansion of K-fashion and beauty brands.

Omotesando The Hyundai Global Flagship Store Opening Run Scene (from left), Shinsegae Hyperground Thailand Popup 'K-Experience Fair', Lotte Department Store Next Lab's first popup hub 'Lotte Mall Westlake Hanoi' Exterior.

Taking K-Brands Global

On July 10, Hyundai Department Store launched its first overseas flagship store, THE HYUNDAI, in the Tokyu Plaza Omokado complex shopping mall in Omotesando, Tokyo, Japan. The response exceeded expectations. The number of visitors in their 20s and 30s at Tokyu Plaza Omokado increased by more than five times compared to before, and queues form every weekend before the store even opens. Sales also surpassed the initial targets by more than 30%.

Park Dongyong, Head of the The Hyundai Global Team at Hyundai Department Store, commented, "The synergy between a space that encapsulates the essence of Seoul and the competitiveness of K-brands drew visitors," adding, "By 2030, we plan to establish around ten flagship stores in key Asian markets such as Japan, Taiwan, and Hong Kong."

Lotte Department Store is targeting overseas markets with its K-fashion development program "Next Lab." In addition to launching a popup at Lotte Mall Westlake Hanoi in Vietnam, the company plans to expand further into Tokyo and Osaka, Japan, in the second half of the year. Building on these achievements, Lotte Department Store aims to officially launch permanent K-fashion specialty stores, "Lotte Department Store Next Lab," in major overseas hubs such as Vietnam and Japan next year.

Shinsegae Department Store is also expanding its overseas business through its overseas expansion support platform, "Shinsegae Hyperground." Shinsegae has held popups in Thailand, Japan, Singapore, and France, and the number of overseas popups has grown from one in 2023 to five last year. This year, the goal is to host ten popups, with plans to expand into Europe, North America, and Malaysia in the second half of the year.

Platforms Instead of Stores: A Changing Overseas Strategy

The overseas strategies of the department store industry have changed. From the late 2000s to the mid-2010s, the main approach was to directly build or lease large department stores in China and Southeast Asia. However, this model often led to losses or withdrawal from the market, due to a combination of massive upfront investment costs, sluggish local consumption, and geopolitical risks such as the THAAD crisis.

Recently, the focus has shifted to platform businesses that introduce K-fashion, beauty, and F&B brands using local distribution networks. Department stores handle contracts, customs clearance, logistics, marketing, and event operations, while brands concentrate on product and content development. Department stores earn operational revenue and fees, and brands can cost-effectively test their potential in overseas markets before expanding into regular stores or local networks.

This shift is underpinned by the slowing growth of the domestic department store market. As the market matures and capacity for new stores diminishes, finding new growth drivers has become a top priority. According to the Ministry of Trade, Industry, and Energy's "Major Retail Business Sales Trends," the department store share of the total retail market peaked at 15.8% in 2022, then declined for three consecutive years—to 15.4% in 2023, 14.5% in 2024, and 14.2% in 2025.

An industry insider remarked, "Overseas popups are not simply sales events but serve as testbeds for examining local consumer response, price competitiveness, and brand recognition. By leveraging data captured during such events, companies can build a structure connecting regular store entry, local distribution networks, and online sales. This could allow the K-brand platform business to become a new revenue model for department stores."

This content was produced with the assistance of AI translation services.