What: Shinsegae's Factory Store achieves KRW 100 billion in annual transactions through strategic expansion and innovative off-price retail model, while maintaining strong sustainability commitments.

Why it is important: The achievement showcases how department stores can successfully diversify their business models through off-price retail while addressing sustainability concerns and supporting smaller fashion companies.

Shinsegae's Factory Store has demonstrated remarkable growth since its 2017 launch at Starfield Goyang, expanding to 18 locations and achieving over 100 billion won in annual transactions. The concept, which offers 30-80% discounts on excess inventory from both Shinsegae's Boondeashop and various domestic and international brands, has seen average annual growth of 38% from its initial 7.5 billion won in sales. The success extends beyond financial metrics, serving as a win-win business model that helps small fashion companies manage inventory and reduces clothing waste. The initiative also demonstrates strong corporate social responsibility through partnerships with the Beautiful Store and Goodwill Store, donating clothing worth 800 million won in 2024 alone. With plans to open four additional locations, Shinsegae has set an annual transaction target of 120 billion won.

IADS Notes: Shinsegae's Factory Store success reflects broader transformations in Korean retail. The initiative's growth aligns with Shinsegae Group's November 2024 organizational restructuring to enhance operational efficiency, demonstrating the company's strategic focus on different retail formats. This success comes amid strong performance across Korean department stores, which achieved 3.8% combined sales growth in May 2024 despite economic challenges. The Factory Store's expansion parallels the industry's broader shift toward experiential retail, as evidenced by February 2024 trends showing Korean retailers transforming spaces for enhanced customer engagement. The model's success in building customer loyalty echoes the December 2023 revival of department store culture centers as effective tools for revenue generation. While Shinsegae continues to innovate in luxury retail, as shown by its June 2024 launch of "House of Shinsegae", the Factory Store's success demonstrates the company's ability to effectively serve different market segments while maintaining strong corporate social responsibility through initiatives like clothing donations.

Shinsegae Factory Store transactions surpass 100 billion won, targets 120 billion