Shinsegae to Acquire Lotte's Centum City Branch; Lotte to Focus on Busan Main Store

Retail Rivals Strike First-Ever Store Asset Deal for a "Win-Win"
Shinsegae to Develop "Shinsegae Town" with Hotels and Offices
Lotte to Renovate Key Stores and Invest in New Shopping Malls

Shinsegae Department Store will acquire Lotte Department Store’s Centum City branch in Haeundae-gu, Busan. It plans to add the adjacent store to its existing Shinsegae Centum City and Centum City Mall, and develop the area into a “Shinsegae Town” linked to a hotel, offices and residential facilities. Rather than continue operating its Centum City branch, Lotte Department Store will focus investment on key locations, including its Busan Main Store, and new shopping malls. The two long-time rivals in the retail industry are entering a win-win arrangement, exchanging store assets for the first time and strengthening their respective core businesses.

Lotte Shopping and Shinsegae announced the plan to transfer the assets of Lotte’s Centum City branch on October 29. The acquisition price is reportedly around KRW 200 billion. The deal will be completed after relevant procedures, including a business combination review by the Korea Fair Trade Commission. Lotte’s Centum City branch will continue normal operations until the transaction closes, and the closing date will be set after the review is complete.

Lotte Centum City branch. Photo courtesy of Lotte Department Store.

Shinsegae to Develop “Shinsegae Town”; Lotte to Reshape Its Portfolio

The acquisition will put the two department stores that have operated side by side in Busan’s Centum City shopping district under Shinsegae’s focus. Lotte’s Centum City branch opened in 2007. Two years later, in 2009, Shinsegae Centum City opened as the world’s largest department store. Shinsegae drew customers by combining shopping with leisure and cultural facilities, including Spa Land and an ice rink, and added Centum City Mall in 2016. That same year, it became the first department store in the region to surpass KRW 1 trillion in annual sales. Since 2023, it has recorded sales of more than KRW 2 trillion for three consecutive years. Lotte’s Centum City branch posted sales of about KRW 135.2 billion last year.

Shinsegae plans to renovate the Lotte store and turn it into a mixed-use space offering shopping, culture and leisure. It will connect the store to its existing department store and mall, and introduce distinctive content to attract more visitors. Integrated operations will also help the company achieve economies of scale and improve operational efficiency.

Shinsegae also plans to develop a large-scale complex on Site C in Centum City, including a luxury hotel, prime offices and premium residences. It will connect the department store and mixed-use development facilities to create a destination encompassing shopping, culture, tourism, business and accommodation. The goal is to attract not only customers from Busan and Gyeongsangnam-do, but also international tourists and business travelers, and develop the area into a world-class mixed-use lifestyle hub.

Lotte will use the sale as an opportunity to reshape its store portfolio. The company determined that its Centum City branch, which has served as a retail hub in eastern Busan for about 20 years, faced limitations in achieving growth and profitability amid changing customer demand and market conditions. After considering various ways to improve the store’s competitiveness, Lotte decided to sell the asset and focus its resources on growth hubs.

In Busan, Lotte will focus on its Busan Main Store and Lotte Mall Dongbusan. The Busan Main Store, where sales to foreign customers have increased by more than 150% this year, will begin a phased, full-store renovation this month, starting with the opening of a specialist intellectual property (IP) section. Lotte Mall Dongbusan, located in the Osiria Tourism Complex, will continue to strengthen its tenant brands and product selection.

Lotte is also investing in key stores in the Seoul metropolitan area. It completed full-store renovations at its Incheon and Nowon stores this year, and began a full-store renovation at its Jamsil store this month, starting with the food hall. At year-end, its Main Store will unveil “Lotte Town Light,” a large-scale media facade, as well as a space showcasing Lotte’s history. The company is also pursuing new shopping mall projects. After recently opening a shopping mall with a new concept, Lotte Mall Valley Town Cheongnyangni, at its Cheongnyangni store, it plans to develop large-scale shopping facilities in Suseong, Daegu; Sangam, Seoul; Songdo, Incheon; and Jeonju, North Jeolla Province.

A view of Shinsegae Department Store Centum City. Photo provided by Shinsegae Department Store.

From Competition to a “Win-Win” Partnership, Boosting Synergies

The deal is also significant as the first store-asset transaction between Lotte and Shinsegae, which have long been competitors. By securing space next to one of its key stores, Shinsegae will be able to expand the scope of its mixed-use development in the Centum City area. Lotte, meanwhile, will reorganize its assets with growth and profitability in mind and secure capacity to invest in key stores and new businesses. The two companies, which have competed in the same shopping district, are now moving to build on their respective strengths.

To minimize disruption from the store’s closure, Lotte plans to give customers, employees and tenants ample advance notice. It will first consider transferring employees to other stores in the Busan area, and will support tenants in making a smooth transition in accordance with their contract terms.

Shinsegae President Park Juhyung said, “This asset transfer is significant because it has created a business environment in which both companies can grow further, moving beyond competition. We will develop Shinsegae Centum City into Shinsegae Town, where shopping, culture, tourism and urban spaces are organically integrated, and make it a landmark global hub representing Korea.”

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