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| Galleria Department Store in Seoul's affluent Apgujeong-dong / Courtesy of Hanwha Galleria |
By Kim Jae-heun
Galleria Department Store, operated by Hanwha Galleria, saw sales growth of 4 percent year-on-year in the first half of this year. The result is particularly notable as the outlook on department stores has been negative due to the pandemic.
Analysts say the company has handled the crisis well to withdraw sluggish businesses including its duty free shops, while struggling to improve its business structure and adopt premium specialized strategies.
Galleria Department Store took good care of super-rich customers with its distinguished VIP program and successfully opened a new branch in February in Gwanggyo in Suwon, Gyeonggi Province. Strong sales coming from the luxury goods sector also helped the department store brand to put up a good defense.
Despite its disadvantage coming from a comparatively smaller business scale to that of its competitors, it adopted the same strategy as Britain's Selfridges to survive in the market. Although Selfridges owns only four stores around the metropolis, it focused on the key branches to make huge investments in them and overcome its smaller business scale.
Galleria, too, operates five outlets across the country but it has built them into the top department stores in each region by achieving an average annual sales growth of 3.3 percent for three consecutive years.
Based on solid performance amid the unprecedented COVID-19 crisis, Galleria plans to walk a different path from the industry's big three and concentrate on VIP customers.
The key to improving Galleria's business structure has been to clear up the sluggish business by adopting the strategy of "choice and concentration." Last year, it closed down duty free shops that had been recording losses for a while. Experts say this move played a decisive role in breaking through the difficulties that all other department stores are going through currently.
At the end of January, Galleria also shut down its very first department store in Suwon, Gyeonggi Province, where sales have long stagnated. Galleria became the only franchise in the industry to go into the black and if this lasts until the end of this year, it will set an all-time sales record of 2.2 trillion won.
While the big-three local department store brands ― Shinsegae, Lotte and Hyundai ― are putting a lot of energy in their online business, Galleria has decided to stick to what it's good at ― VIP-centered premium business.
Galleria depends heavily on wealthy customers and it's been steady in offering them distinguished services. Last October, it opened an external facility for its VIP customers called Maison Galleria in Daejeon. The following March, Galleria opened another facility in Seoul to secure new VIP customers in the capital also.
At Maison Galleria, curators appeal to their customers with exclusives on new luxury goods and private cultural events. This is not only increasing loyalty of VIP customers but also increasing sales.
