Global sneaker boutiques that ventured into South Korea are closing their stores one after another. It is interpreted that the decline in the collecting craze for limited edition sneakers due to the economic recession and the market restructuring around SIS Dental have hindered their performance.
According to the retail industry on the 12th, the U.S. footwear retailer Foot Locker will withdraw from the South Korean market in the first half of this year. This follows the opening of its first store near Hongik University in Seoul in April 2021, marking more than four years. Foot Locker closed its stores in Kondae and IFC Mall last December and ceased operating its online store last month. On the 10th of next month, it plans to close its store in COEX Mall.
Foot Locker's withdrawal from the South Korean market is part of a global strategy reorganization announced by the company's headquarters. Foot Locker stated that it plans to close 400 stores worldwide in 2023, and in August of last year, it disclosed that it would suspend sales in South Korea, Denmark, Norway, and Sweden.
In the third quarter of last year, Foot Locker's revenue was $1.9058 billion (approximately 2.76 trillion won), a 1.4% decrease from the previous year. During the same period, its net loss increased to $33 million (approximately 48 billion won), compared to $28 million in the previous year.
Since its entry into South Korea, Foot Locker has consistently recorded operating losses. According to the Financial Supervisory Service, Foot Locker Korea's revenue increased from 16.5 billion won in its first year in 2021 to 45.1 billion won in 2023. However, its operating losses were 9 billion won in 2021, 12.7 billion won in 2022, and 11.5 billion won in 2023.
Foot Locker has carried popular global brands such as Nike, Jordan, Adidas, Puma, and Converse, among others. It garnered attention from sneaker collectors as a so-called "limited edition sneaker sanctuary." However, the downturn in the sneaker collecting craze due to the economic recession and the declining market value of limited edition and collaboration sneakers have resulted in a slowdown in growth globally.
The rise of new direct-to-consumer (D2C) running brands like On Running and Hoka, which account for 70% of Foot Locker's revenue, has also negatively impacted its performance.
Earlier, British footwear boutique JD Sports, which entered the domestic market in 2018, and Japanese footwear boutique Atmos, which entered in 2017, also withdrew from the market citing poor performance in 2023.
With the successive withdrawals of brands, the remaining domestic shoe boutiques are expected to be limited to Japan's ABC Mart and E-Land's Supen. ABC Mart, the leader in the domestic shoe boutique market, recorded a revenue of 617.3 billion won in 2023, an 8.7% increase from the previous year. Operating profit was 60.2 billion won, approximately a 9% increase from the previous year.
The decline of shoe boutiques is a global trend. Sneakersnstuff, a sneaker boutique established in Sweden in 1999, recently ceased operations in the U.S. and Japan, and has filed for bankruptcy. The company's revenue once reached 100 million euros (approximately 150.4 billion won). In 2022, Eastbay, a U.S. shoe boutique with a 40-year history, ended its business.