By Jane Han
Staff Reporter
Homegrown clothing company Tomboy recently shut down its brand ``Itself by Tomboy'' just one year after its launch last June. The quick, business decision was based on a simple equation: Fold before losing more money. If the answer was so simple, however, does this mean Tomboy didn't do enough pre-launch research?
Not quite, because that would mean a handful of other brands have made the same critical mistake. The surprise variable was the explosive consumer reaction toward newly-introduced foreign labels in Korea.
First, it was UNIQLO, Gap, Banana Republic, and then Zara. One after another, the Japanese, American and European brands started to take center stage in the domestic fashion landscape.
``It was generally expected that they would see a slow start since Korean consumers weren't familiar with the new names,'' said the Tomboy official.
Contrary to expectations, however, things actually went the other way.
Gap and Banana Republic, operated by local retailer Shinsegae International, saw a 20-25 percent sales jump since their launch last summer. Shinsegae International is aiming for an annual revenue of 150 billion won in four years.
Spain's Zara chain, which opened in April as a joint venture with Lotte Group, is doing even better. It rung up sales of more than 100 million won on its first day of opening, and the figure is said to be keeping steady.
What does this mean for homegrown makers?
``We have to reposition our business portfolio to stress our native brand image,'' says Lim Kyung-jin of Cheil Industries, one of the country's biggest clothes manufacturers.
For well-footed companies like Cheil, this can be made possible, but it's a different story for other small- and medium-sized makers.
Industry sources say some five to 10 brands closed last year alone, and more are expected to discontinue this year and next. Leaders PJ's Hearst and Lead Mark's Haylnn New York are among the latest shutdowns.
``Shoppers' styles are going more global, but traditional brands here often don't have the same `vision,''' said Lim.
She said, however, they can't insist their agenda if the consumers do not show approval.
Pricing is another factor. Because many of the foreign brands offer a comparatively competitive price, consumers don't see added value in buying Korean-made goods.
Domestic firms are bracing for another wave of overseas labels from entering the local market, as H&M, Forever21 and other well-known fast-fashion brands have hinted at their debuting here sometime next year.