More stores in tourism hot spots shutter amid slumping consumer spending, high rental costs

A store in Garosu-gil area in Seoul's Gangnam District is empty, Dec. 24, 2024. Newsis

By Ko Dong-hwan

• Published Apr 21, 2025 8:00 AM KST
• Updated Apr 21, 2025 3:57 PM KST

Shopping hot spots in Seoul, including those popular among foreign tourists, are seeing an increasing number of stores go out of business, particularly among fashion, accessory and shoe retailers.

Amid steadily rising consumer prices, people are cutting nonessential spending. The shift from offline to online shopping, along with surging property rental costs, is further fueling concerns that the commercial districts may be hollowing out.

One area reflecting this trend is Garosu-gil. Once a bustling boulevard in southern Seoul favored for its premium fashion, dining and consumer brands, the street now stands as one of the city’s most visibly declining commercial districts.

According to a report by real estate service provider Cushman & Wakefield, the area saw 41.2 percent of its businesses vacant in the fourth quarter of last year. It is the highest rate among the city’s major commerce areas, compared to Cheongdam at 18 percent, Gangnam at 15.4 percent and Itaewon with 10.5 percent.

A report from the Seoul Metropolitan Government also showed the survival rate of new businesses that have operated for three years or less in Garosu-gil remained at 59.41 percent in the fourth quarter of last year. The report also showed that last year, 48 businesses closed in the fourth quarter, 54 businesses in the third quarter, 38 in the second and 46 in the first.

Rental costs in the Garosu-gil area have been on rise as well. According to the report, the rental cost per 3.3 square meters rose every quarter since the first quarter of 2024, from 169,000 won ($119) to 180,000 won, 193,000 won and 225,000 won by the end of the year.

A small clothing store in the area that has been operating for the past decade said it pays a monthly rent of 2.7 million won ($1,895), adding that larger stores in the area pay rents two or three times higher. The store owner, now working without employees to save on wages, complained about the drastically reduced number of daily visitors compared to five or six years ago. The store’s sales, according to the owner, have dropped to a third of what it used to make during the COVID-19 period in 2020-22.

The streets around Ewha Womans University used to be another go-to for tourists and trend savvy shoppers for the many accessory stores, nail salons and fashion vendors that filled the area. Now, many of those stores have been gutted, with some buildings scheduled for demolition.

Realtors in the area say an increasing number of landlords renting to cash-strapped fashion businesses are no longer waiting for new vendors to fill the empty stores, instead deciding to demolish the structures and reopen as different retail businesses or studio apartments.

Market observers say the changes are driven not only by soaring rental costs but also by weakening consumer sentiment, as more people cut back on nonessential spending amid rising prices.

According to Statistics Korea, consumer prices rose 2.1 percent in March, with a weaker local currency pushing up the cost of imported food, agro-fishery products and services. Processed food prices climbed 3.6 percent as major food companies raised prices in response to the higher cost of imported raw materials.

As food costs soar, consumers tend to cut back spending on nonessential goods. According to a separate Statistics Korea report in February, the retail sales index of semi-durable goods, such as clothes, shoes and bags, declined 6.8 percent year-on-year.

Experts note that an increasing number of consumers are using e-commerce to look for essential items at lower prices, while consumers with high purchasing power tend to stick to offline premium brand stores. They added that these polarized consumption patterns leave small businesses vulnerable and drive more of them to close.