Korea’s Shinsegae Department Store Seeks Direct Entry Into the Auction Market
Shinsegae, a major Korean department store, is reportedly trying to enter the auction market directly. Shinsegae previously pushed for the acquisition of a domestic auction company, but there is a rumor that negotiations have broken down. Shinsegae recently established an art MD, which is interpreted as a direct entry into the art auction market. Shinsegae Department Store is competing for the top two in the Korean department store industry, while Shinsegae Group, which has department stores as its core affiliate, operates 44 affiliates, including Starbucks Korea and professional baseball teams. Shinsegae Department Store has been operating galleries in the department store since the 1960s.
Shinsegae’s search for entry into the auction market dates back two years. In early 2021, through a general shareholders’ meeting, ‘exhibition of art, sales, brokerage, rental business and related consulting business’ was added as a new business goal. In December of the same year, Shinsegae participated in a paid-in capital increase in Seoul Auction, one of Korea’s two largest auction companies, and acquired a 4.82% stake. Last year, a rumor of the acquisition of Seoul Auction circulated, and the Korea Exchange’s inquiry announcement said it was “considering (acquisition),” making it official. However, Shinsegae’s acquisition of Seoul Auction is no longer progressing. Shinsegae mentions that it is continuing to consider promoting Seoul Auction, but rumor has circulated that the acquisition has been canceled due to news that Seoul Auction recently sent a teaser letter (investment notice) to Sotheby’s.
Analysts say that Shinsegae’s business judgment is to create synergy with the auction business as an offline distribution powerhouse. Shinsegae continued to target the online market as a new cash cow, but it was not easy to overtake existing starters. Accordingly, it is analyzed that with the growth of the Korean art market, Shinsegae has turned to the auction business using 13 department stores in Korea. Shinsegae’s move also seems to have affected major department stores in the United States and Japan, which are struggling with the expansion of online distribution. In fact, Shinsegae has hosted auction business inside the department stores since 2020. Along with Seoul Auction, it sold works by famous domestic and foreign artists at Shinsegae’s luxury online shopping mall, SI Village.
In addition, securing young customers is also in line with efforts to enter the auction market. Since a year or two ago, young Koreans have been interested in Art Tech (Art + Financial Technology). According to the Korea MZ Generation Art Purchase Research report released by the Korea Arts Management Service last year, the MZ generation (Millennials and Generation Z) favors on-site art fairs more than the previous generation. The high proportion of young people purchasing art offline can be an opportunity factor for Shinsegae.
The distribution industry is interested in Shinsegae’s future moves. In particular, it is paying attention to synergy with art. An official from the distribution industry said, “As the online distribution market grows rapidly, the offline distribution industry is focusing on new businesses. As Shinsegae has already been interested in the art market for a long time, there is a possibility of participating in the art auction market in any way.”
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