Fashion brands that grew based on online are returning to the streets. Even as growth in Korea's fashion market slows, fashion companies including Musinsa and SATUR are rapidly expanding offline stores. With more foreign tourists boosting sales in key commercial districts such as Myeong-dong and Seongsu, brands are also building offline spaces to deliver brand experiences that are hard to offer online.
On the 28th, Samjong KPMG said last year's domestic fashion and apparel retail sales totaled 86.1591 trillion won, up just 0.8% from a year earlier. In effect, it was flat. Even so, offline businesses of brands that grew on online are expanding quickly. In the first quarter, offline sales of Musinsa's private brand Musinsa Standard jumped 86% from a year earlier. During the same period, nationwide visitors to Musinsa stores rose 98% to 9.23 million. Musinsa plans to expand Musinsa Standard stores to 50 nationwide this year.
SATUR, part of Dae Myung Chemical, which built recognition online, has established offline as a core growth pillar. SATUR's sales last year were 110 billion won, up 83% from a year earlier. The share of offline in total sales rose 18 percentage points in a year to 71%, and sales at directly operated stores increased 131%.
Sales contributions from the 20 new stores opened last year alone are about 13 billion won. The Myeong-dong store generates about 1 billion won per month on average, and the Seongsu store about 500 million won. The strategy of acquiring customers online and then expanding touchpoints offline has translated into actual sales growth.
Similar moves are appearing at other online-based brands. Emis, which boosted recognition through online and social media (SNS), opened a flagship store in Hongdae in Jul. and, on the 21st of this month, launched its first store in Jeju. The Barnnet, which grew on an online fandom, also opened its third standalone flagship in Aewol, Jeju last month, following Seongsu and Myeong-dong. Kolon FnC's 24/7 Series, which started in online distribution, likewise unveiled its first flagship store in Seongsu in Jun.
◇ as foreigners increase, Myeong-dong and Seongsu become "global showrooms"
An increase in foreign tourists is also behind the fashion industry's renewed investment in offline. According to the Korea Tourism Organization, about 12.8 million foreigners visited Korea from January to July this year, up 21.3% from a year earlier.
Fashion companies are using Myeong-dong and Seongsu, which draw many foreigners, as bases to meet overseas consumers directly. Musinsa plans to open a second Musinsa Standard store in Myeong-dong in Sep. SATUR is also expanding stores not only in Myeong-dong but also in areas popular with foreigners such as Seongsu, Gwangjang Market, and Bukchon.
Without opening stores overseas, they can gauge foreign customer reactions and raise brand awareness in Seoul's key districts. Offline stores thus serve as domestic sales points and, at the same time, as a kind of "global showroom" for overseas expansion.
The role of offline stores is changing. Because shoppers can easily compare products and prices online, simply displaying and selling the same products no longer suffices to draw consumers into stores.
At "SATUR House Bukchon," which opened in Mar., SATUR incorporated the character of Bukchon into the store by arranging moon jars, sachets, and collaborative items with ceramic company Ido. LF Corp.'s Dunst opened its first flagship, "The Ocean," in Aewol, Jeju, combining the sea, music, and vintage furniture. Malbon Golf operates "Malbon House" in Bukchon, which captures the ambience of a hanok, and in Seongsu runs a space that blends golf with art, music, and fashion.
The expense burden is not light. According to the Korea Real Estate Board (REB), in the second quarter this year, the Seoul store lease price index rose 0.46% from the previous quarter. Myeong-dong, which draws foreign tourists and young consumers, jumped 3.19%, and Ttukseom rose 2.55%.
An industry official said, "Fashion companies are opening stores in key commercial districts because one space can serve multiple roles," adding, "While generating sales by selling products, it also becomes a billboard that promotes the brand, a space for online customers to experience the brand, and a showroom to meet overseas consumers."
Offline competition in the fashion industry is shifting from how many stores to where and what kind of stores to open. That is why brands that gathered customers online are accepting high rents and returning to the streets.