South Korean Retailers Expand Off-Price Stores Amid High Inflation and Shifting Consumption Patterns

Amid persistent high inflation, South Korean retailers are bolstering their "off-price" store operations, a strategy focused on selling branded goods at steep discounts. This move aims to capture consumers seeking value, a segment that has grown alongside demand for premium products, creating a "K-shaped consumption" pattern. Shinsegae Department Store is leading this charge by significantly expanding its "Shinsegae Factory Store" in Gangnam. The store's floor space is increasing from approximately 1,091 square meters to 1,388 square meters, accompanied by a new brand identity. This marks the first comprehensive rebranding since the store's inception in 2017.

Off-price stores, also known as OPS (Off-Price Store), purchase excess inventory or past-season items directly from brands and sell them at discounts of up to 90%. These stores differentiate themselves from traditional outlets by offering deeper discounts and a wider selection of brands under one roof. Shinsegae is broadening its product categories beyond apparel and accessories to include travel goods, small appliances, global sports footwear, and character-based intellectual property merchandise. The Gangnam location will feature new specialized zones, including a "Beauty Treasure Box" and a "Travel Specialty Zone," transforming the store from a simple clearance outlet into a lifestyle destination where customers can discover diverse products.

Shinsegae Factory Store achieved over 100 billion won in annual sales last year and aims for more than 130 billion won this year with the addition of three new stores. The company also plans to expand internationally by connecting domestic small and medium-sized fashion brands' inventory with overseas markets. Hyundai Department Store and Eland Retail are also aggressively pursuing off-price strategies. Hyundai operates seven "Off Works" stores, with sales up 32% year-on-year in the first half of this year, and is rebranding some locations as "Off Works Warehouse" to include lifestyle items. Eland Retail's "NC Fix" stores, launched in 2013, operate 10 branches nationwide and saw a 59% increase in June sales compared to the previous year. The urban beauty outlet "Off Beauty," operated by Daemyung Chemical Group's Q&B International, has rapidly expanded to 30 stores since its launch in May last year.

The global off-price market is projected to grow significantly, from $405.6 billion in 2026 to $736.7 billion by 2033, with an average annual growth rate of 8.9%, according to Coherent Market Insights. Experts believe that in an era of high prices and economic uncertainty, the demand for quality-assured branded goods will persist. Off-price stores, offering lower prices than online channels, are expected to remain a key focus for consumers.

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Quality-assured brand products are still in demand even amid high prices and recession. Off-price stores, which are cheaper than online channels, will continue to attract attention.