What’s in store for Korea’s retail market in 2012
By James Assersohn
Year 2011 saw an enormous change and improvement to the Korean retail market and these changes have set the groundwork and a precedent on the way the market will continue to develop over the next few years.
The export led Korean economy is coming under increasing pressure with the European debt crisis but this has not seemed to stop the fashion savvy Korean consumer from shopping.
Revenue growth rates in the main three department store operators Lotte, Shinsegae and Hyundai have slowed towards the end of the year but month on month sales are still seeing positive gains and providing real growth to the market place.
Luxury operators like Louis Vuitton, Chanel and Gucci have all seen double digit revenues growth which has been led by both the domestic demand but also the vast increase in tourists from Japan and China.
These impressive sales growth figures and the propensity by Koreans for branded items have seen many more international retailers enter and also aggressively expand their brands throughout Seoul and the peninsula.
Swedish global clothing chain H&M have carried on their expansion with more stores in high profile locations in the new shopping malls D Cube City and Lotte Gimpo Mall as well as a high street store in the Apgujeong district in southern Seoul.
Spanish retailer Inditex who owns the Zara brand have built on the success and introduced their other brands including Massimo Dutti, Bershka, Pull & Bear and Stradivarius.
Japanese-owned Uniqlo continued their domination of the fast fashion market and built their biggest store in Asia. The 3,500 square-meter store in Myeong-dong opened up 50 meters from an existing store but still had tens of thousands of people through the doors within the first few days.
Lacoste and American retailer Forever 21 have also boosted their presence in Seoul by securing new premises in fashion street Garosugil in southern Seoul near Apgujeong.
The expansion of the existing brands hasn’t been limited to the fast fashion retailers, and Louis Vuitton opened up a 550 square-meter store in Incheon International Airport. This was a significant move by the biggest luxury retailer in the world as it was the first store in the world to be located in an airport.
Donna Karen also opened their first high street store in the Cheongdam Fashion Street and Gucci is also shortly about to unveil their new flagship stores on the same street.
New operators also entered the market with shoe brands ― Charles & Keith from Singapore and Aldo from Canada all opening up a number of stores with further aggressive expansion plans for 2012.
European brands French Connection and BEBE also entered the market late in 2011 with additional roll out plans for 2012.
Creating the retail environment for all of these new brands as well as the expansion of existing is not easy particularly in Seoul given the high land prices and difficulty in piecing together a parcel of land big enough to create shopping malls.
But this year we have seen a new mall linked to Gimpo International Airport and the mixed use development D Cube City in the Sindorim district opening.
Next year is also set to see a new mall at the site of IFC in Yeouido. IFC is set to be one of the first full scale shopping malls not be anchored by a department store in Korea and should continue to help change positively the mindset of many Koreans that shopping should be confined simply to department stores.
In terms of new areas to watch, Garosugil near Apgujeong saw a raft of new occupiers in 2011 with many tired old shops being replaced by new international and domestic retailers. This trend is set to continue into 2012 and will position Garosugil as one of the best street shopping locations in Korea.
Samsung’s fashion arm Cheil Industries is set to launch their new fashion brand ‘8 Seconds’, LG Fashion secured space on the street as have International brands such as Zara, Lacoste and a number of others.
International brands over the last few years have improved greatly the competition and quality of goods to the Korean consumer. Many domestic brands have been forced out of prime high street positions as landlords see the brand power and strength that has been refined by these already successful International brands.
In response, domestic fashion companies have had to greatly improve the quality of their merchandise to combat their ever reducing market shares and the companies that will be left will be a greatly improved and sophisticated version of what there was on offer before.
Even with an uncertain global economic situation, 2012 is set to be an exciting time for the retail market as more brands enter the market and the competition heats up, which should provide a better and more advanced shopping experience to the customer as well as change the landscape of a number of high streets in Korea.