BUSAN ― When Shinsegae made a bid to purchase a 75,742-square-meter site from Busan City in 2004, its biggest rival Lotte was caught off guard.

It never imagined Shinsegae would invest so much to build the world’s largest department store on Lotte’s home turf and turn the wasteland into one of the hottest shopping havens in Asia.

In addition to Shinsegae Centum City, a must-visit attraction for tourists, Shinsegae Group is building a compelling shopping network in Busan.

It opened a high-end supermarket, SSG, in Marine City, entered the duty-free shopping business by acquiring the nation’s second-largest duty-free shop from Paradise Group last year, and is building its third premium outlet in Kijang, about half an hour’s drive northeast from the city center. Busan’s top hotel Westin Chosun is also a member of Shinsegae Group.

Four years after opening the Centum City department store, Shinsegae said last week it will develop about half of the remaining site into an entertainment facility housing Korea’s first Madame Tussauds wax museum and KidZania entertainment center for children by 2016.

The retail giant plans to invest about 300 billion won ($277,000) in the new facility, and develop the remaining 16,512-square-meter site over the next five years to cap off its “urban entertainment center” project.

Shinsegae Centum City became a key landmark of Busan from the outset, with its supersized spa facility, ice rink, golf range, multiplex, bookstore, stylish spaces for shopping, and cultural events, attracting some 16 million visitors in its opening year. Its sales continued to post double-digit growth every year, raking in 824 billion won in 2012.

“When Shinsegae Centum City opened in 2009, the area had just begun development. In just four years, skyscrapers have sprung up and a number of major retailers have opened here,” Jang Jae-young, chief executive of Shinsegae, told reporters on Friday.

“Haeundae (where Centum City is located) has risen as Busan’s top commercial district. Shinsegae Centum City is already the world’s largest department store certified by the Guinness World Records, but once it expands by about 35,000 square meters, we are confident it will become Asia’s top shopping center.”

Hanwha plans to open a Galleria department store in Marine City, a newly developed upscale residential area full of skyscrapers in Haeundae district. Six-star Park Hyatt Hotel opened in Marine City last month, reflecting the city’s rise as the center of tourism.

As Busan thrives with conventions, new hotels and the Busan International Film Festival, Hong Kong has lost many of its tourists from mainland China to other Asian cities in recent years.

Compared to 2009, the number of people using Busan’s Gimhae International Airport nearly doubled last year. Foreign tourists also increased by 29 percent in the same period to 2.6 million.

As it celebrates its fourth anniversary, Shinsegae Centum City added about 50 new brands including Dolce & Gabbana, Celine and IWC, and renewed its men’s fashion floor in a bid to attract the growing population of fashion-savvy male customers.

Shinsegae is also expanding aggressively nationwide, while Lotte is busy exploring overseas markets.

Shinsegae last year acquired a controlling stake in Central City, the landlord of its department store in Gangnam, southern Seoul, and plans to expand the store in the next two years.

Spanning over 59,000 square meters in the heart of Seoul, Central City houses the Shinsegae department store, Seoul Express Bus Terminal, Marriott Hotel and a multiplex cinema.

Shinsegae is also seeking to purchase the Incheon bus terminal complex, which houses one of its department stores, by filing an injunction against Incheon City’s deal to sell it to Lotte for 900 billion won. 

Claiming that it had offered to buy the site and building for 950 billion won, Shinsegae accused Incheon City of unfairly granting favors to Lotte.

“Incheon is a place we cannot give up,” Jang said.

“We believe the acquisition price (of 950 billion won) is adequate, considering the business efficiency and future value of the Incheon store. We concluded there is no alternative to the customer base we have built in Incheon for 15 years.”

Shinsegae is also expected to open more SSG supermarkets to achieve economies of scale, although it has no finalized plans yet. The ones in Busan and Seoul’s Cheongdam-dong are seeing sales increase but are still not profitable.

“Possible locations could be Bundang, Seoul’s Seongbuk-dong or Dongbu Ichon-dong, where there is demand and awareness of diverse foreign food labels,” said Kim Goon-sun, executive vice president of Shinsegae.

By Kim So-hyun (sophie@heraldcorp.com)