South Korea’s two retail giants Lotte and Shinsegae are duking it out to attract the growing number of rich Chinese shoppers visiting the country.
Lotte Department Store is reportedly reviewing plans to build an eight to nine-story building next to its headquarters in the shopping district of Myeong-dong, Seoul, a popular destination for Chinese and Japanese tourists.
Chinese tourists visit the shopping district of Myeong-dong, Seoul, during the Lunar New Year holiday in February. (Yonhap)
The new building is expected to be built to meet the increasing demand of Chinese visitors, often referred to as “youke,” who are mostly purchasing Korean luxury goods to avoid high taxes and forgeries of designer brands at home.
“We’re just reviewing floor designs and have not yet applied for construction approval,” a company official told local media.
The main store’s business targeting Chinese tourists has been growing. Its sales last year reportedly jumped 70 percent from 2013.
A Lotte spokesman declined to disclose sales figures.
The retailer also said it may expand its store in the port city of Busan, another popular and attractive destination for Chinese tourists.
About 912,000 Chinese people visited Busan last year, up 16.8 percent from the previous year’s 781,000.
“Expanding the shopping area is seen as a way to lessen the cost burden of launching a business in new locations,” an analyst from Daewoo Securities said.
Shinsegae is also ramping up its business to lure more youke by leveraging its sophisticated and trend-setting image.
The department store, a shopping unit of the country’s 13th largest conglomerate by assets, launched a specialized section on the basement floor in November for some 20 high-end watch brands.
Shinsegae stressed that it is mainly targeting Chinese tourists rather than local consumers.
Sales of premium watches rose 7 percent on-year in the opening month, 13.7 percent in December and 56.9 percent in January, spurred by the shopping sprees of Chinese tourists.
The upward trend continued in February, growing by 42 percent.
“Chinese consumers usually buy twice as much as local consumers. Their shopping items are not just limited to Rolex and Cartier, but Jaeger-LeCoultre and Vancheron Constantin with prices ranging from 30 million won ($27,200) to 50 million won,” a Shinsegae official said.
By Suk Gee-hyun (monicasuk@heraldcorp.com)