Lotte Department Store is launching a long-term strategy to expand its investment in shopping malls. Lotte announced plans to invest KRW7tn (approximately $5.07bn) by 2030 to expand its new shopping mall brand, ‘Time Villas,’ which debuted at the Suwon branch, to a total of 13 locations. Time Villas is a mixed-use shopping mall brand combining ‘time’ and ‘villas,’ symbolizing a space where ‘a new era unfolds.’ Starting with the grand opening of the Suwon location, Lotte plans to build four new shopping malls by 2030. Additionally, it will convert six existing locations into Time Villas malls.

If the expansion progresses as planned, Lotte Department Store’s portfolio by business, which refers to sales composition, will shift significantly by 2030. Department store sales, which accounted for 75% of total revenue last year, are expected to drop to 60%, while shopping malls will rise from 1% to 30%. Outlet stores are projected to decrease from 24% to 10% over the same period. Lotte Department Store has also set a target of achieving KRW6.6tn ($4bn) in sales by 2030. CEO Gabriele Chung emphasized, ‘Shopping malls will become the cornerstone of the domestic retail industry. While the department store sector remains stagnant, shopping malls are expected to grow.’ He added that based on trends observed in Japan, which has a similar retail market, department store sales in South Korea are expected to grow by only 2% annually through 2030, while shopping malls are forecasted to see 17% growth.

Gabriele Chung explained the shift in consumer behavior, noting that while traditional customers preferred assistance while shopping, 79% of MZ Generation, who were born in early 1980s to early 2000s, prefer to shop independently, often viewing assistance as burdensome. He highlighted that ‘as the importance of ‘customer experience’ grows, malls are evolving from simple retail spaces to environments where people eat and spend their time.’ Chung also credited the success of Lotte World Mall in Jamsil and the overseas venture in Westlake, Hanoi, Vietnam, as drivers behind this aggressive investment in shopping malls.

Lotte World Mall welcomes 55mn visitors annually and has seen 25% sales growth every year. West Lake Hanoi, which opened in September last year, has also attracted 10mn visitors and generated KRW280bn($202.8mn) in sales over the past year. Leveraging the success of Westlake Hanoi, Lotte Department Store plans to expand its shopping mall ventures internationally through new store openings and consignment operations. Lotte Department Store’s strategy for differentiating Time Villas centers on three pillars: ‘Closer locations, ‘More variety,’ and ‘More elegance.’ Collaborating with renowned architects, including Pritzker Architecture Prize-winning Richard Meier and British architecture firm LDA, Lotte aims to create landmark shopping malls. Gabriele Chung noted, ‘We aim to offer as many diverse contents as possible, far beyond a typical shopping mall. Bacha Coffee, which launched a store in Cheongdam in Aug., generates KRW800mn to 900mn ($652,000) in monthly sales. The brand focuses more on gifts rather than coffee, making it a differentiated content offering.’

He continued, ‘The future of shopping malls like Time Villas lies in connecting all customer experiences, from fashion and food and beverages, to entertainment, culture, travel, and business. Time Villas will set the standard for future retail that all distribution companies will aspire to.’ The first Time Villas mall, located in Suwon, officially opened Thursday, following a soft launch in May 2024. With a total floor area of 234,710m², it aims to compete directly with the nearby Starfield Suwon, which spans 330,000m². Time Villas Suwon combines the features of both a department store and shopping mall, offering more luxury brands than Starfield. Even shared tenants, such as Nike, enjoy larger store spaces at Time Villas. The new malls will feature both indoor and outdoor elements, with areas designed to feel like urban streets, blending seamlessly within the shopping environment.