SEOUL: South Korean retailers are expanding beyond Seoul, particularly into regional cities such as Busan, as a surge in foreign tourism creates new opportunities for growth.
By late October, South Korea had already surpassed its record number of foreign visitors in 2025, with more tourists now arriving directly in regional cities rather than starting their trips in Seoul.
According to the Korea Airports, arrivals at regional airports rose about 37 per cent to approximately 3.24 million in the first nine months of the year, outpacing the 17.3 per cent increase recorded at airports in the capital region.
“Unlike in the past, regional stores now draw foreign tourists, not just locals, and serve as strategic hubs for brand awareness,” one industry official said.
“Retailers now target areas where tourists and young shoppers turn into steady store traffic.”
In Busan, South Korea’s second-largest city, Shinsegae and Lotte are reshaping their rivalry, pursuing different strategies to capture growing demand.
Foreign tourists spent more than 1 trillion won (S$940 million) in Busan from January to September, marking the first time a region outside Seoul has crossed the 1 trillion won threshold.
Shinsegae aims to transform Centum City, a commercial hub in the coastal Haeundae district, into a retail destination similar to its Myeong-dong project in Seoul, where it is connecting buildings around its flagship store to create a retail complex targeting tourists and young luxury shoppers.
That ambition gained momentum in late October when the company announced plans to acquire Lotte Department Store’s Centum City branch.
The store is located next to Shinsegae Centum City, the highest-grossing department store outside the capital region, with annual sales exceeding 2 trillion won.
Lotte’s branch, meanwhile, saw its annual sales decline from a peak of more than 300 billion won to about 130 billion won by 2023.
Shinsegae said it plans to connect the two buildings with its adjacent mall and an undeveloped plot earmarked for a luxury hotel, offices and residences, creating a sprawling complex it calls “Shinsegae Town”.
“This deal creates an environment in which both companies can grow further,” Shinsegae chief executive Park Joo-hyung said.
“We will develop Shinsegae Town into a global landmark representing Korea.”
While Shinsegae is concentrating its investment in one location, Lotte is adopting a broader approach by assigning distinct roles to each of its four remaining stores.
It will use the proceeds from the sale to renovate its Busan flagship store in Seomyeon and invest in Lotte Mall Dongbusan, both of which have recorded rising sales.
Its Gwangbok branch in the old downtown area will target the growing number of foreign tourists, while its Dongnae store will focus on local shoppers.
“The move reflects our strategy of focusing resources where they count most in a fast-changing retail landscape,” a Lotte Department Store official said.
Lotte’s Busan flagship, which recorded sales of 1.2 trillion won in 2025, has already attracted foreign diners, with their food and beverage spending surging 120 per cent year on year from January to October.
Busan’s retail expansion extends beyond department stores.
CJ Olive Young recently unveiled a fish market-themed outlet in Millac-dong, displaying cosmetics and snacks in crates resembling those used to showcase seafood at traditional markets.
In Nampo-dong, it expanded an existing store to create its largest outlet outside the capital region.
Other regional cities are also a priority for South Korea’s leading beauty retailer.
Olive Young is investing 123.8 billion won outside the capital region in 2026 to open or renovate 43 large stores.
For example, its Gyeongju outlet in North Gyeongsang Province, which opened in October, features a traditional Korean hanok-style facade and sells keychains depicting local heritage sites.
“Many stores are under construction, and we plan to open a large number in the fourth quarter,” an Olive Young official said.
Fashion brands are following a similar strategy.
Eyewear brand Blue Elephant has been opening stores in destinations experiencing growing tourist spending, including Busan and Jeju Island. In July, it added a branch in Gyeongju featuring a roof inspired by traditional Korean hanok architecture.
Musinsa is capitalising on foot traffic at two Lotte branches in Busan and operates an outlet in Seomyeon, where foreign-issued cards accounted for about 30 per cent of purchases, an increase of 11 percentage points from a year earlier.
Combined sales at its eight stores outside the capital region rose about 44 per cent over the same period.
Musinsa opened its first regional Standard store in Daegu in 2023, helping revive a struggling shopping street by attracting customers who had previously followed the brand online.
With the opening of its Changwon outlet last month, 10 of its 44 Standard stores are now located outside the capital region.
“Three years of investing in physical stores outside the capital have started to show results in both sales and foot traffic,” a Musinsa official said. Korea Herald/ANN
