KoreaToday Seouls High Streets – How High Are They?
Gangnam Station vs. Myeongdong vs. Apgujeong
By Jane Han
Staff Reporter
The hustle and bustle of shoppers, the trail of carts that sell everything from handmade earrings to fake Gucci, and the endless row of brightly-lit shops could easily convince an average shopper that Apgujeong, Myeongdong and Gangnam Station are alike. But to the experts, Seoul's top three high streets are clearly different, both in retail and in real estate value.
Each of the districts houses a different batch of retailers willing to pay a certain cost for a predictable effect, says Richard Hwang, the managing director of Cushman & Wakefield, a global commercial property brokerage.
``Myeongdong attracts the most diverse consumer demographic, from office workers and housewives to teenagers,'' he said in a recent Korea Times interview, explaining that the central Seoul district has emerged as one of the most popular sites for affordable global brands because of this wide exposure.
Forever 21, from the U.S., and Zara, from Spain, are some of the newest players to enter the Myeongdong scene.
``This isn't somewhere where you see a shopper standing around contemplating whether to buy or not for hours,'' said the retail property expert. ``Decisions are made fast, most often in just minutes.''
Morgan Parker, president of Taubman Asia, a global shopping center developer, agrees that the fast-paced atmosphere is one of the reasons why reputable foreign brands are attracted to Myeongdong.
``This street used to be a hotchpotch of businesses that were often incompatible,'' he said. ``You had the hairdresser beside a bank that was next to a noodle shop. There was no coordinated consensus, but over the past decade, it has become hip and trendy.''
Currently, a wide range of local and foreign brands including Whoau, Ralph Lauren, Adidas, Swarovski and The Body Shop have set up shop in Myeondong.
Hwang said Gangnam Station has a largely similar look and feel as Myeongdong, but has an entirely different character beneath the surface.
``Office workers and college students ― these are the main consumers you're looking at,'' he said, adding that the southern Seoul street by one of the most crowded subway stops is most rewarding to advertisers for this reason.
Hwang said hundreds of retailers compete to snatch one of the 100 main roadside spaces for maximum exposure.
``Many companies pick Gangnam Station to kick off their first store because they want that special promotional boost,'' he said, ``but after getting what they need, they soon pull out because of high lease costs.''
According to Cushman & Wakefield, Gangnam Station saw robust growth in rental costs last year, increasing 37.9 percent year on year to about 6.5 million won per square meter per year, the 10th highest fee in the world, followed by other major shopping streets like Manhattan's Fifth Avenue, Hong Kong's Causeway Bay and Paris' Champs Elysees.
Aside from Gangnam Station and Myeongdong, Apgujeong and Chungdam-dong streets are usually grouped together to be classified as the most high-end shopping district.
But Hwang made sure that the two areas were distinguished.
``You can't refer to them interchangeably because the two areas offer a completely different range of brands and experience,'' he said.
Chungdam-dong is where top European makers such as Louis Vuitton, Prada, Gucci, Hermes and Cartier have nested. Apgujeong is a few blocks down the road, where shoppers can find less expensive private collections.
``The consumption pattern in these higher-end areas is distinct in that shoppers don't set out necessarily to buy,'' he said, explaining that many simply intend to browse until they come across an outfit with a hefty price tag. ``The number on the tag probably won't be their main concern, though.''
Another characteristic specific to this area is that brand turnover isn't quick.
Hwang hinted that more than 40 percent of high-fashion store buildings lined up on the streets of Chungdam-dong are owned by foreign labels.
``Many of them purchased the properties when prices plummeted after the financial crisis 10 years ago, allowing them more financial stability,'' he said.
Parker said that the southern Seoul district has matured and evolved enormously and expected continuous growth right through the downturn.
``Luxury retailers have seen phenomenal growth in Korea,'' he said, stressing that the luxury market is where the local retail market can buck the economic downswing.
South Korean consumer sentiment rebounded last month from a 10-year low in December, but the outlook remains grim, as the global recession has begun to cut more deeply into Asia's fourth-largest economy.
Fading Korean Brands
While Apgujeong, Myeongdong and Gangnam Station offer unique representation, more and more homegrown labels are slipping out of these prime retail districts.
Cushman & Wakefield said in its latest report that local fashion houses are reducing their store sizes or even leaving, as their profits are not able to bear the high rental costs.
``The lack of brand identity is knocking Korean brands down from the competition,'' said Hwang, adding that the brand cycle is short because of the limited awareness shoppers have of labels.
Parker agreed, saying that Korean brands haven't considered brand identity because of large department stores, which served as their prime distribution channel.
``Korean labels put together a collection and sell it in a 10-pyong department store space in the corner,'' he said, stressing the practice has impaired companies from becoming a comprehensive retailer.
``Korean brands now have to compete internationally whether they like it or not,'' said Parker, emphasizing the need to globalize. ``Successful labels are producing their clothes out of Romania and selling them in New York two weeks later.''
Taubman Centers, which has developed well-known malls such as the Beverly Center in California, said that brands will soon have more breathing space, as Korean department stores are starting to build more spacious emporiums.
Taubman is also building a megamall in the Songdo International Business District by the latter half of 2011.
In the next three to five years, Hwang says there will be a much wider variety offered to Korean shoppers, as the market will more aggressively open up to new foreign labels.
``There will be more purchase channels, which will subsequently lead to more brands to compete,'' a Taubman executive said.
Parker acknowledged that the economic downturn is affecting the country, but remained hopeful that the South Korean retail market will ride out the slump with shoppers continuously spending and striking a positive balance between saving and consumption.
