May 19, 2020 12:41
Old-fashioned department stores are deserted due to the coronavirus epidemic, which has sent their revenues into freefall.
Lotte Department Store's first-quarter operating profit declined 82.1 percent on-year to W28.5 billion, while Hyundai Department Store's plummeted 65.3 percent and Shinsegae Department Store's 57.7 percent (US$1=W1,234).
"A rapid increase in online purchases due to the epidemic has been the downfall of many department stores, which are the most vulnerable offline retail channel," said Suh Yong-gu at Sookmyung Women's University. "If they fail to offer innovative and differentiated services, their decline will accelerate even further."
Several global department stores have already bitten the dust. Low-end U.S. chain J.C. Penney, which dates back to 1902, filed for bankruptcy protection last week. Until the early 2000s, J.C. Penney, along with peers Macy's and Sears, symbolized the booming American consumer culture.
But Sears, established in 1893, already went bust in October 2018, while Macy's, which opened in 1858, is reeling under massive debts. About a week before J.C. Penney, Neiman Marcus also filed for bankruptcy in the U.S. state of Texas.
Established in 1907 in the Austin area, Neiman Marcus grew by selling high-end products to customers flush with oil money. But it had been reeling under US$5.1 billion of debt when coronavirus forced it to shut down all 43 of its stores in the U.S.
Germany's biggest department store operator Galeria Kaufhof also filed for bankruptcy on April 1, and the U.K.'s Debenhams followed suit on April 6.
The downfall of traditional department stores was triggered by the radical shift in the retail industry's landscape and only accelerated by the coronavirus pandemic. Analysts project that more than 3,000 department stores worldwide will close down this year.
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