Store Decorated with 'Positano's Sun' Theme
Counterintuitive Strategy to Attract Customers in Off-Season
Foundation to Improve Weak 3Q Profitability
Hyundai Department Store is creating a resort atmosphere themed around 'The Sun of Positano' at all its stores nationwide. It is unusual for a department store to hold a large-scale event with significant costs during the off-season summer period, drawing attention from the industry. Through this event, Hyundai Department Store plans to break the formula of 'summer vacation season is the department store off-season' and create momentum to improve profitability in the third quarter.
Stores Transforming into Italy's Positano
Rendering image of 'Sole di Positano' to be implemented at The Hyundai Seoul Sounds Forest. [Photo by Hyundai Department Store]
According to the industry on the 2nd, Hyundai Department Store has been decorating 16 stores nationwide like Positano, a representative resort in southern Italy, from The Hyundai Seoul starting on the 28th of last month until the end of August. In the case of The Hyundai Seoul, a large sun sculpture, lemon trees, yellow striped pattern parasols, and sunbeds were installed in the 3,300㎡ indoor garden Sounds Forest, and shops were arranged in the central space like a Positano alley summer market. The shops showcase 15 Italian local brand products such as handmade gelato 'Bibidotta', kitchen furniture 'TVS', and scooters 'Vespa', with Italian staff also deployed to create a vacation atmosphere.
The Trade Center branch will cover the store's exterior walls with graphics created by world-renowned illustrator Marie Doazan, inspired by the scenery of Positano village, blending the blue Mediterranean Sea, cliff-like cliffs, and lemon trees. Lemon tree pergolas and Italian concept shops will be located on the basement first floor. This is not just about spatial decoration. Experience-type content such as classical busking performances themed on street musicians of Positano beach, cultural center lectures where visitors can experience Italian culture including cooking, traditional crafts, and Renaissance artworks, and art exhibitions themed on vacations will be prepared at 16 stores nationwide.
Exterior view of Hyundai Department Store Apgujeong Main Branch. [Photo by Hyundai Department Store]
Off-Season Customer Attraction Effect for Department Stores
Department stores usually hold spatial decoration events in winter. They enhance customer attraction by decorating the store interior with Christmas and year-end/new year atmospheres to match the Christmas season. However, in summer, with vacations concentrated in July and August, marketing with high costs due to decreased visitors was virtually nonexistent.
After the regular department store sale at the end of June before the vacation season, the department store industry effectively enters the off-season. Department store sales showed a downward curve starting from the summer sale. Fashion and clothing, which have a high sales proportion, also had low profitability due to the low unit price of summer products. According to the Ministry of Trade, Industry and Energy, as of July last year, department store sales decreased in all categories compared to the previous month, including miscellaneous goods (-4.4%), women's suits (-2.2%), and women's casual wear (-3.9%). In August, even men's clothing sales dropped by 2.8%, resulting in an overall sales decrease of 7% compared to the previous month.
Department store performance is also sluggish every third quarter. Hyundai Department Store's operating profit in the third quarter last year was 79.8 billion KRW, about 15 billion KRW less compared to the first quarter (95.2 billion KRW) and the fourth quarter (96.0 billion KRW). Although it was higher than the second quarter last year (61.3 billion KRW), considering that Chuseok fell in September last year, the third quarter performance is analyzed as the lowest.
Foundation for Third Quarter Performance Improvement
The department store industry experienced a high-growth period due to revenge consumption following overseas travel restrictions in 2021-2022 and 'flex (show-off) consumption' driven by asset value increases, but concerns have arisen that it has recently entered a low-growth phase again. In the case of Hyundai Department Store, operating profits were 304.8 billion KRW in 2021 during the COVID-19 pandemic and 378.8 billion KRW in 2022, increasing by 53.5% and 24.3% year-on-year respectively, but last year's operating profit decreased by 5.4% to 303.5 billion KRW.
Therefore, the industry is paying attention to whether Hyundai Department Store, by adopting an off-season contrarian strategy for the first time in the industry, can lay the groundwork for a performance rebound.
Hyundai Department Store plans to continue decorating its stores with overseas representative resort concepts and present them every summer, starting with this summer's signature themed event. A Hyundai Department Store official said, "To strengthen a sustainable signature landmark strategy while reflecting Hyundai Department Store's unique color, we plan to introduce themes of famous overseas resorts worldwide such as France and Spain every summer. We will provide differentiated content to make it a vacation photo spot as popular as Christmas, maximizing the experiential value of offline retail spaces."
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