November 24, 2024

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Sounds Forest, an indoor garden, at the Hyundai Seoul in Yeouido, western Seoul (Hyundai Department Store)

Lotte, Shinsegae and Hyundai, the three retail giants of South Korea, are scrambling to be the first to build a new mega shopping complex in the southwestern city of Gwangju, one of the key campaign pledges of President Yoon Suk-yeol that is aimed at facilitating the local economy.

Hyundai Department Store on Wednesday announced that it is in talks with Humans Holdings, a local real estate developer, to open a mega shopping mall in Gwangju.

The proposed construction site is a 310,000-square-meter parcel of land in the district of Buk-gu, which had been used as a textile factory until 2020, when Human Holdings bought out the property for 685 billion won ($529 million).

Hyundai Department Store said it will embark on the construction project soon after it receives a green light from the city of Gwangju.

The megasized mall, tentatively called the Hyundai Gwangju, aims to become a cultural landmark, as well as a shopping and leisure destination, like the Hyundai Seoul in Yeouido. If the project goes as planned, it will be the first big mall in the city.

Following Hyundai’s lead, Shinsegae Group also appears to be considering building a shopping complex in Gwangju after its first failed attempt in 2015. At the time, the group had planned to build a mega shopping mall and luxury hotel there, but scrapped the plans due to resistance from small businesses nearby.

Since then, Shinsegae has maintained a low profile in its business expansion, but more recently it is reportedly showing renewed interest in the city where its retail rivals are flocking to cater to growing consumer demand.

Lotte Group is no exception. Sources say Lotte is also reviewing potential sites for a new shopping mall in Gwangju. Among the three retail giants, Lotte operates the most shopping outlets there, including a Lotte Department Store, a Lotte Outlet and four Lotte Mart stores.

Gwangju, with a population of 1.5 million, is one of the biggest cities in Korea, but residents have long complained about a lack of infrastructure for shopping. Amid the presidential campaign in February, Yoon had pledged to build a new mega shopping mall in the city.

Data shows that Gwangju residents are also willing to open their wallets and spend.

According to data from Gwangju Shinsegae Department Store, its customers spent more than 100 billion won in Shinsegae Department Stores in other regions. In particular, customers from Gwangju and South Jeolla Province spent more than 5 billion won in Daejeon Shinsegae in August last year following the new opening.

Despite the rosy outlook, the three retail giants have several hurdles ahead, with the first and foremost being getting approval from the city of Gwangju.

Gwangju Mayor Kang Gi-jung said Thursday during a transition committee meeting that no retail group has formally made an offer yet.

“The city will set the guidelines for the new mega mall. If the Hyundai Gwangju suits our idea of the mall, it could be the one (to start business here),” Kang said, adding that the city has not yet decided on the total number of malls that could be constructed.

Kang also said the city might not launch a public tender for the development and that it could pick the right business partners among Hyundai, Shinsegae and Lotte.

By Byun Hye-jin (hyejin2@heraldcorp.com)