Lotte shuts down its mall in Dongdaemun

Lotte shuts down the operation of its Lotte FITIN fashion mall in Dongdaemun. The closure order has taken effect on Dec. 31 and cited a business slump in the region as the reason for the company’s decision.

Why the mall had to cease operations

Lotte Asset Development's real estate firm only started operating the FITIN mall seven years ago, and for a few years, it has become one of the most popular malls for tourists visiting South Korea. It was stated that more than 50% of the mall’s sales were generated from foreigners.

"Due to the economic damage caused by the COVID-19 pandemic, the majority of clothing brands in the mall are currently leaving,” The Korea Times quoted a Lotte official as saying with regards to the closure of its Dongdaemun store. “We've decided that it is better to close down the building because of the lack of operational efficiency but we have some time left until the contract expires and we are discussing the future of this mall."

The said branch of the Lotte mall called the Lotte FITIN opened to the public in May 2013. At that time, the Hallyu Wave is starting to pick up so the mall offered various Hallyu-related experiences and tourists started to come in. this was also one of the reasons why the Dongdaemun Market has become a familiar name to most of the visitors from around the world.

Aside from the COVID-19 pandemic that badly affected many businesses, another reason why the Lotte mall’s earnings drastically decrease was the rise of online shops. As more people prefer to do their shopping via online outlets, Dongdaemun eventually lost its popularity as the country’s fashion hub. Eventually, stores in the mall barely sell anything that they were forced to leave and in turn, the mall also lost profits.

It was said that the government tried to revive the area but the projects aimed to achieve this goal just did not work. This year, the COVID-19 pandemic worsened the business situation in the area.

With travel bans and people are staying in their homes, the Lotte mall was left with few visitors thus shop owners were burdened with stall rental fees and employees’ salaries. As they leave the Lotte mall, the company has no choice but to just close the business altogether to avoid further loss.

More Lotte stores close down as the pandemic continues

Korea Joongang Daily reported that it is not only the fashion mall that was affected by the COVID-19 crisis but discount chains were also forced to shut down as their sales dive. Lotte Mart has already closed down several stores in northern and western Seoul, Icheon, Dobong and Guro districts. A total of 16 Lotte Mart branches are expected to close before 2021.

Homeplus chain stores in South Korea are also closing some of their branches. At least three stores located in Daejeon, Gyeonggi and Ansan have stopped their operation at the end of 2020 but details of the closures will only be released this year.

“As extreme business uncertainties continue, Homeplus decided to secure liquidity by selling three of its branches,” Homeplus wrote in a statement.

Lotte reported a KRW242.31 billion net loss in the first half of 2020 while Homeplus's net loss grew by 300%, from KRW132.7 billion to KRW532.2 billion.