Stagnating sales lead to deep discounts at department stores
After slashing prices on items from top designer brands, Lotte Department Store is holding a sale on golf clothes and equipment on Wednesday, which the operator says is its largest yet.
Its rival, Hyundai Department Store, is also offering discounts for golfers, doubling the number of products it included in a similar event a year ago.
The slowdown in sales has led department stores to hold numerous promotions. Last year was tough for the retailers as combined sales suffered a fall for the first time since 2004 due to the growing popularity of discount outlets, online shopping malls and direct buying from overseas e-commerce sites. Many consumers are being lured away by the cheaper prices at those alternative platforms.
According to Lotte Shopping, the company posted 8.56 trillion won ($7.8 billion) in sales from its stores last year, down 0.7 percent from a year earlier.
And the situation did not improve entering this year. Sales at Lotte Department Store and Shinsegae Department Store from January to February increased by 1 percent compared to a year ago while Hyundai edged up by just 0.2 percent in the same period.
“As domestic consumption has shrunk, we have set up a special task force that is responsible for organizing a series of sales events,” said Lee Wan-shin, the director of Lotte Department Store’s marketing sales division.
“We are going beyond providing regular seasonal events,” he continued. “Instead, we are offering different discounts with diverse themes.”
Hyundai Department Store plans to offer discounts for cosmetic products starting March 13.
Major department stores are also holding wedding fairs where diverse home decor items and furnishings that suit young couples or two-person households are offered by different furniture companies. Such events used to be a boon for retailers, but this is no longer the case.
“In the past, there were a lot of young couples looking for a bundle of furniture and home appliances at department stores,” said a representative at Hyundai Department Store who asked for anonymity.
“But now, there are not many couples to begin with, as many delay their marriages for different reasons. Even if there is a couple, they are likely to choose alternative shopping channels that will cost less - such as Ikea or other online malls.”
Even though the prospects are not as rosy, Lotte has held a wedding fair for three months in a row to attract consumers. In order to reach out to a wider range of customers, Lotte targeted Chinese couples in its January wedding sale.
The department store chain gave away tickets for a free photo shoot to Chinese couples that purchased a large number of products at the event, though the retailer did not reveal the specific amount.
Hyundai and Shinsegae, meanwhile, have been working to shift the structure of their retail businesses by focusing more on discount outlet malls.
“We plan to expand outlet malls and duty-free businesses to find a new source of revenue,” said Jeong Ji-young, the director of the marketing division at Hyundai Department Store.
BY KOO HEE-RYUNG AND PARK EUN-JEE [firstname.lastname@example.org]