As Korea's three major department store operators—Lotte, Shinsegae, and Hyundai—enjoy an unprecedented boom driven by foreign demand, analysts have picked Shinsegae as their top choice. The reason is that Shinsegae holds competitive stores in key foreign shopping districts and boasts a luxury-focused product lineup stronger than its rivals.
According to industry sources on the 17th, Kyobo Securities and NH Investment & Securities recently named Shinsegae as their top pick among the three department store operators in reports. They cited luxury brand competitiveness as the basis. Seven department stores nationwide carry all of Hermès, Louis Vuitton, and Chanel—collectively known as "Er-Lu-Cha," a barometer used to gauge a department store's luxury competitiveness. Shinsegae accounts for four of them—more than half—including its Gangnam, main, Centum City, and Daegu Shinsegae stores. By contrast, Lotte Department Store's Jamsil branch and Hyundai Department Store's Apgujeong main branch each carry all of the "Er-Lu-Cha" brands, and Galleria Department Store's luxury hall also hosts all three brands.
Shinsegae Department Store's competitiveness also stands out in terms of scale. Shinsegae Department Store holds the largest Hermès and Chanel stores among domestic department stores. The Louis Vuitton store at its main branch is the largest among all stores worldwide. The fact that LVMH Chairman Bernard Arnault visited Shinsegae Department Store's main branch first when he came to Korea in May is also cited as an example demonstrating the distinctiveness of its luxury stores.
The fact that foreign sales are growing around luxury goods is also favorable for Shinsegae Department Store. In the first half of this year, Lotte Department Store's foreign luxury sales rose 130% from a year earlier, Shinsegae Department Store's rose 129%, and Hyundai Department Store's climbed 123%. As foreign consumption expands centered on luxury goods, analysts say Shinsegae Department Store will benefit the most, as it has both core luxury brands and competitive stores in major commercial districts.
"Shinsegae is expected to see the greatest benefit in a recovery phase for domestic and foreign consumption, based on its competitive stores in major commercial districts where foreign consumption is concentrated and its luxury-focused product competitiveness," said Jang Min-ji, a researcher at Kyobo Securities.
