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Tag: Korea

  • South Korean retail sales surged in August

    South Korean retail sales surged in August

    South Korea’s non-store retailers including online shopping and delivery operators raised a record 46.2 trillion won ($39.1 billion) in sales in the first six months of the year as consumers relied much on non-face-to-face businesses amid coronavirus fears.

    According to data from Korea Small Business Institute and Statistics Korea on Monday, non-store retail sales jumped 19.4 percent year over year to an all-time high of 46.2 trillion won in the January-June period. The amount was 13 percent more than the second half of last year and more than doubling 22.6 trillion won in the first half of 2015.

    It was the first time for the bi-annual amount of non-store sales to jump more than 7 trillion won on year from the previous six-month period. The previous record increase was 4.8 trillion won in the first half of last year.

    The rapid increase was largely attributed to the outbreak of COVID-19 as non-store retailers gained huge popularity for its convenience of being able to allow consumers to purchase goods without having to visit offline stores amid social-distancing measures to contain coronavirus. Many companies also advised employees to work from home.

    According to Woowa Brothers, the operator of the country’s largest food delivery app Baedal Minjok, the number of mobile orders jumped 176 percent on year in the January-June period. The surge has further accelerated during the coronavirus outbreak.

    Amid growing demand for non-store shopping due to the virus scare, retailers have turned aggressive in selling products via online and home shopping channels.

    As more people opt for non-store shopping, sales at department stores fell 13.4 percent on-year to 12.9 trillion won in the first six months of the year and those of specialty retailers 10.3 percent to 61.1 trillion won. Sales of duty-free stores especially plunged 37.1 percent during the cited period as board-crossing traveling was virtually impossible.

    Sales at large discount stores, supermarkets, and convenience stores increased in the first half of the year from a year ago but growth was smaller than those of non-store retailers.

    Large discount stores raised 16.2 trillion won in sales in the January-June period, up 1.1 percent from a year ago. Sales at convenience stores increased 2.8 percent to 12.7 trillion won and supermarkets 6.8 percent to 23.2 trillion won.

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  • South Korean department stores refurbished to attract cashed-up MZ shoppers

    South Korean department stores refurbished to attract cashed-up MZ shoppers

    Department stores are undergoing renovations to attract the so-called MZ generation – encompassing the Millennials and Generation Z.

    After its first renovation in 11 years, Hyundai Department Store’s Jungdong branch reopened the ‘U-Plex’ Fashion House on Wednesday in Bucheon, west of Seoul.

    The storehouses 130 domestic and international fashion brands popular among the MZ generation, including the Street Fashion Zone, where the top 10 most-popular fashion brands online are located.

    The largest shopping mall dedicated to sportswear in the greater Seoul area opened on the department store’s fourth and fifth floors, featuring boutiques from Nike, Adidas, New Balance, and 34 other sports brands.

    Lotte Department Store Yeongdeungpo Branch also redesigned its floor space by filling the first and second floors with brands popular among the MZ generation. Cosmetics brands, originally located on the first floor, have been moved to the third floor.

    Shinsegae Department Store Yeongdeungpo Branch also completed renovations to attract younger customers.

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  • South Korean duty-free operators ‘desperate’ amid protracted pandemic

    South Korean duty-free operators ‘desperate’ amid protracted pandemic

    Stung by the protracted new coronavirus outbreak, South Korean duty-free operators are struggling to overcome the industry-wide slump with belt-tightening measures, including increasing the number of closing days at some outlets in major local cities and cutting their overseas operations.

    Industry leader Lotte Duty-Free began closing its outlets at Coex in southern Seoul and the southeastern port city of Busan every Sunday and Monday from this month.

    In April, Lotte decided not to open the two stores every Monday, as the number of customers sharply declined due to the Covid-19 pandemic. The latest move came as a resurgence in virus cases made it difficult to expect imminent business normalization.

    Since late May, Shinsegae Duty-Free has closed its outlets in Seoul’s upmarket southern district of Gangnam and Busan every Sunday and Monday.

    Hit by the virus outbreak, South Korean duty-free operators have suspended the operations of their outlets at major airports either partially or wholly.

    The pandemic has also dealt a blow to duty-free operators’ overseas business. Local duty-free shops had rushed to expand their foray into overseas markets in recent years in a bid to reduce their reliance on Chinese visitors and generate decent profits.

    Lotte Duty-Free plans to close its duty-free stores in Jakarta and Bangkok in the second half and liquidate its units in Indonesia and Thailand.

    In the first half, Lotte withdrew its business from Taiwan. The number of Lotte Duty-Free overseas units will fall to 12 outlets in six countries if it completes the closure of the two units in Southeast Asia.

    Some improvement in sales may give some solace to local duty-free operators, but their revenues remained far below the pre-pandemic level.

    Combined sales at duty-free shops in South Korea in July rose by 12.4 percent from the previous month, as small Chinese vendors returned to scoop up duty-free goods, according to industry data.

    It marked the third straight month of gains since the figure fell below 1 trillion won for the first time in four years in April.

    The number of visitors to local duty-free units topped 500,000 in July, marking the first time in four months.

    “Duty-free sales are tipped to further increase in the third quarter, compared with three months earlier, on the back of the government’s eased restrictions on sales channels of duty-free goods,” said Na Eun-chae, an analyst at Korea Investment & Securities Co.

    To prop up the pandemic-hit segment, the government decided in late April to temporarily permit sales of duty-free goods via local sales channels.

    It also allowed registered foreign buyers to receive duty-free products at their home countries without the need to visit South Korea.

    Meanwhile, major duty-free players are expected to take part in the bidding for new business licenses at the country’s main international airport as they set sights on long-term recovery in the post-Covid-19 era.

    The operator of Incheon International Airport, the country’s main gateway west of Seoul, will close the bidding for new duty-free shop business licenses at six sections, including cosmetics, liquor and tobacco, at the airport’s Terminal 1, on Tuesday.

    In March, Lotte Hotel, Hotel Shilla and Hyundai Department Store Duty-Free won duty-free business licenses at Terminal 1, but Lotte and Shilla gave up the business rights in April amid faltering sales.

    As the airport operator failed to pick new entities, Lotte and Shilla have continued to run their business after extending their licenses.

    Industry watchers expect major duty-free operators to participate in the bidding, as the airport operator has proposed a sharp cut in lease fees.

    “Earnings are still not good, but we are considering participating in the bidding (for the long-term perspective), taking into account the post-pandemic situation,” said an official at a local duty-free operator.

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  • Seoul cafes face new trading restrictions as Covid-19 returns

    Seoul cafes face new trading restrictions as Covid-19 returns

    South Korea is restricting operations of restaurants, bakeries and franchised coffee chains in the greater Seoul area in an effort to contain a new outbreak of Covid-19. Under the plan that lasts until next Sunday, restaurants and bakeries can operate until 9pm, and only takeaway and delivery will be permitted from 9pm to 5am.

    For Seoul cafes, only takeout or delivery will be permitted regardless of operating hours, as cluster infections traced to coffee shops have been reported.

    Customers visiting coffee chains for takeaway must follow quarantine measures, such as making entry logs, wearing masks, and keeping a safe distance.

    The move is part of the government’s strengthened virus curbs in Seoul and the surrounding areas, home to half of the country’s 51 million population, as the country is struggling to curb spiking virus cases.

    On Sunday, the country reported 299 new Covid-19 cases – a drop below the 300 marks for the first time in five days – but health authorities remain on high alert as the triple-digit daily increase continued.

    Instead of raising the level of social distancing to the highest Level 3, the country unveiled stronger and “tailored” virus curbs last Friday for vulnerable groups and risk-prone facilities, a move widely viewed as ‘Level 2.5’.

    The government has been cautious about raising the social-distancing guidelines to Level 3 from the current Level 2 due to the far-reaching impact on the economy.

    In line with the stricter social distancing guidelines, cafe workers are putting store chairs upside down to indicate they operate only for takeaway or delivery.

    Some customers who frequent such coffee joints to study or read books have shifted to bakeries that operate normally until 9pm.

    Meanwhile, South Korea began to suspend the operation of indoor sports facilities, including fitness centers and billiard halls, in the wake of virus infections at indoor sports centers.

    The government also expanded no-assembly orders from large academies to almost all cram schools in the wider Seoul area. Only online lectures will be permitted.

    To protect the elderly from the risk of infection, visits to nursing homes, and facilities will be banned.

    Health authorities will also make one-third of all employees at government agencies and public institutions work from home. They also recommended private companies take similar steps.

    In mid-August, the government raised virus curbs to Level Two in the Seoul region for two weeks and expanded it across the nation starting last Sunday.

    Health authorities extended the current step for one more week in the wider Seoul region, as the number of new infections has not shown signs of easing.

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  • Ikea Korea sales growth

    Ikea Korea sales growth

    Ikea’s business in South Korea has reported 32.6-per-cent sales growth over the past fiscal year despite the impact of the coronavirus outbreak.

    The success of the retail business over the period has been attributed to a surge in interest in home furnishings as people remain at home to avoid the pandemic, according to Ikea Korea country retail manager Fredrik Johansson.

    Customer numbers at Ikea stores also increased by 31 percent during the period to 12.3 million people, with online shoppers increasing by 14 percent to 44.7 million.

    The firm has made concerted efforts to market goods at affordable prices and engage in remote sales efforts. It is also about to commence a new sustainable home-furniture marketing campaign to support climate action within Korea, along with strategies to buy back and resell used furniture to replace 20 percent of the firm’s delivery vans with electric vehicles by the end of the next fiscal year.

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  • Apple Korea makes US$84 million offer to ease anti-competitive concerns

    Apple Korea makes US$84 million offer to ease anti-competitive concerns

    Apple’s South Korean unit has offered 100 billion won (US$84 million) worth of programs for consumers and mobile phone carriers, in an effort to address concerns about the company’s alleged violation of competition law.

    Apple Korea has been under probe by the Korea Fair Trade Commission (KFTC) over allegations that it had required the country’s three mobile operators — SK Telecom Co, KT Corp and LG Uplus Corp — to pay the cost of television advertisements and warranty service for its iPhones.

    The KFTC has said Apple Korea holds a clear advantage over local mobile carriers and that handing over the cost of advertisements is only another means to squeeze their profits.

    Under the programs, Apple Korea promised to spend $33.7 million to build a research-and-development center for local small and medium-sized firms in the smartphone-manufacturing sector.

    Another $21 million will be spent to give consumers 10-per-cent discounts on repairs and a smartphone insurance service, the KFTC said.

    Apple Korea will spend another $21 million to set up an education center to train professionals in the sector of information, communication, and technology, the KFTC said, and give mobile carriers more say in sharing their advertising costs and approving their ads.

    Song Sang-min, director-general handling the issue at the KFTC, said such measures are expected to help reduce the advertising burden on mobile carriers.

    Apple Korea had unilaterally ordered mobile carriers to set ad costs, but the measure will help Apple Korea and mobile carriers discuss how to share such costs, Song said.

    The KFTC said relevant parties will discuss whether to accept Apple Korea’s proposal by October 3.

    If relevant parties decide to accept the measures by Apple Korea, the KFTC will finally endorse them.

    South Korean law allows a company accused of anti-competitive practices to state a correction scheme without deliberating whether those practices violate the country’s competition law.

    In a statement, Apple pledged to step up cooperation with its business partners and consumers in South Korea.

    “We are looking forward to deepening our relationships in Korea by enhancing support for education, small businesses and facilitating future generations with new skill sets,” the statement said.

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  • Allbirds enters South Korea

    Allbirds enters South Korea

    New Zealand’s footwear label Allbirds is expanding its retail network into South Korea. From the early stages of Allbirds’ international expansion plan, South Korea was always high on the destination list as the company makes its Wool Runner product in Busan.

    “As we continue to expand our international footprint, we’re excited to finally enter the Korean market and connect with our existing community here, further establishing Allbirds as an important sustainable fashion player in Asia,” said Sandeep Verma, head of international.

    The company considers South Korea as a strategic market as it looks to strengthen its presence in greater Asia.

    “Allbirds’ mission to tread lighter on the planet has resonated with people far and wide, from Berlin to New York, from LA to Shanghai, and we’re delighted to share our purpose-led products and a world-class level of care with our Korean customers,” Verma said.

    Founded in 2016 by New Zealand footballer Tim Brown, who later teamed with American biotech engineer Joey Zwillinger, Allbirds now sells in 35 countries with more than 20 of its own brick-and-mortar stores worldwide. The brand is renowned for its logo-free sneakers made from sustainable materials.

    “The response we’ve received thus far has been beyond what we could’ve ever imagined when we first started this,” said Zwillinger, Co-CEO of Allbirds, referring to the international expansion program.

    Last April, Allbirds became the first apparel brand to label all of its products with a Carbon Footprint score, designed to inform customers of the carbon impact of its products.

  • South Korean bakery franchise Tous Les Jours for sale

    South Korean bakery franchise Tous Les Jours for sale

    South Korean food and entertainment conglomerate CJ Group has announced it plans to sell its retail bakery franchise Tous Les Jours.

    CJ Group has chosen accounting firm Deloitte Anjin to manage the sale process and at the same time launched a review of options to boost the chain’s competitiveness.

    Tous Les Jours is South Korean’s second-largest bakery chain between its archrival, SPC Group-owned Paris Baguette. Both chains have expanded overseas into markets including Mainland China, Malaysia, and Vietnam, with Paris Baguette’s footprint spreading as far as the US and even its namesake city Paris.

    CJ Group has sent background documents about the business to private-equity companies located domestically and offshore to gauge interest in the business.

    Tous Les Jours operates about 13,000 stores across South Korea.

    Market analysts say that in looking to sell the chain, CJ Group’s CJ Foodville is looking to use the proceeds to expand its food-service business amid the Covid-19 crisis.

    Last year, CJ Foodville sold its coffee chain brand Twosome Place to a Hong Kong-based private-equity fund for US$168.8 million.

  • South Korean KOLs banned from promoting products without full information

    South Korean KOLs banned from promoting products without full information

    South Korea will ban social-media influencers – KOLs – from pitching a new product or service on their online platforms without disclosing their business ties with corporate sponsors, government officials have announced.

    The move comes amid controversy over some famous social-media influencers’ involvement in the shady practice called “backdoor online advertising.”

    The Fair Trade Commission (FTC), South Korea’s antitrust watchdog, said its revised advertising guidelines for social-media platforms will become effective from September.

    The new rules require KOLs on social media platforms, such as YouTube or Instagram, to state clearly whether their product endorsements are “financially rewarded or intended for promotion”.

    Vague wording like “thanks to” or “reviewer group” will be prohibited on their videos as well.

    The corporate watchdog said it will start to crack down on and punish violators after a certain guidance and grace period.

    Violators — both influencers and corporate sponsors — will be slapped with a fine of up to 2 percent of related sales and revenue or US$422,000.

    Some social media influencers have drawn flak for their backdoor advertising. A popular ‘mukbang influencer’ with 4.7 million viewers recently apologized for being involved in the unfair advertising practice.

    In addition, a renowned YouTuber with an audience of 2.68 million has announced her retirement from mukbang, a portmanteau in Korean of “eating” and “broadcast.”

    Last year, the antitrust watchdog clamped down on companies’ backdoor advertising through influencer reviews for the first time.

  • GS Retail recruits local residents to deliver products

    GS Retail recruits local residents to deliver products

    South Korean convenience-store operator GS Retail plans to hire local residents with ample knowledge about their neighborhoods to speed delivery of products in areas where alleyways and addresses may prove confusing.

    GS Retail, which runs the convenience-store chain GS25, will begin testing its new ‘Neighborhood Delivery’ service, which is open to all applicants without limits to time and task.

    Each person will be delivering products within a 1.5km radius of their current location. The products, too, will weigh less than 5kg, allowing retirees, homemakers, and after-work office workers to work without difficulty.

    If a customer orders a product from a nearby GS25 convenience store through the Yogiyo app, the delivery person can respond to an incoming delivery call to bring the product to the customer.

    Each delivery will pay US$2.35-$2.68 in commissions.

    GS Retail plans to test the new delivery program at three convenience stores in Seoul’s Gangnam District starting Monday. On August 17, the program will be expanded to cover all GS25 stores throughout Seoul.

    The company aims to infiltrate the $17 billion delivery market with ‘Neighborhood Delivery’, a short-distance quick-commerce platform based on 15,000 brick-and-mortar stores.

  • Football club PSG opens retail store in South Korea

    Football club PSG opens retail store in South Korea

    Football club PSG has become the first European side to open a retail outlet in Seoul, South Korea’s capital city.

    The new store – which is described as a pop-up but looks rather long-term to us – was organized with local football magazine Over the Pitch. It will sell a range of branded goods, including food-and-beverage items, sports products, and entertainment, with a number of exclusive items available only at Seoul.

    “Seoul has long been a key target city for Paris Saint-Germain, a core pillar of our international strategy, and so we are thrilled today to step up our commitment to the market and become the first European club to launch an official store in Korea, with this innovative retail concept,” said the club’s head of diversification and merchandising Fabien Allegre.

    “Seoul and Paris go hand in hand as two iconic cities, and we enjoyed our successful collaboration with Over the Pitch during our previous PSG tour in Miami.”

    The venue, which opened last week, includes the licensed store, a themed cafe, and a display of the team’s football jerseys.

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  • Starbucks opens its largest store in South Korea

    Starbucks opens its largest store in South Korea

    Starbucks South Korea has opened its largest store yet, celebrating the brand’s 21st anniversary in the country.

    Located in Yangpyeong, Gyeonggido near the Namhan River, the store spans three floors and occupies a 1203sqm area and has a design unlike any other in the market.

    “The new store is a reflection of Starbucks commitment to offering more ways for customers in Korea to enjoy the Starbucks Experience,” the company said in a statement.

    The Yangpyeong store is also the first Starbucks in the country to feature a Reserve coffee bar, Teavana bar and drive-thru format together.

    The company said the store is “a new experience” for local customers, incorporating an interactive space and the convenience of the drive-thru. Starbucks is to invite local talent to perform on the store’s rooftop to celebrate the launch.

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  • Craze for Starbucks Korea’s reward items appears unstoppable

    Craze for Starbucks Korea’s reward items appears unstoppable

    Amid the hype for Starbucks Korea’s small suitcases offered under its reward program, customers’ competition to get camping chairs, another promotional item, ran high this week ahead of an end to the seasonal event.

    On May 21, Starbucks kicked off a summer promotional event that finished today, giving away limited editions of goods to customers under its “e-frequency” rewards program.

    To secure one of two “summer-ready bags” or one of three foldable “summer chairs,” a person needed to drink 17 beverages, including three seasonal ones.

    It’s a seasonal event, but this year, the craze to secure pink or green summer-ready bags was high enough to see the formation of long queues in front of Starbucks outlets nationwide at dawn.

    As stockpiles for the suitcases recently ran out, customers’ last-minute race to get camping chairs heated up early yesterday morning.

    People’s repeated search for the number of remaining chairs with the Starbucks app caused the application’s functions to freeze at one point, according to the company.

    “Since I got a summer chair in early June, I’ve made several attempts to receive a green bag. But I gave up after seeing some 50 people waiting in front of me when I arrived 30 minutes earlier than the opening hour,” said a 39-year-old office worker surnamed Jung.

    Indeed, demand for the summer-ready bags, in particular the pink ones, ran high, riding on the popularity of products targeting “home camping clans” during the new coronavirus outbreak.

    In late May, one customer purchased 300 cups of coffee at once at a Starbucks branch in Seoul’s financial district of Yeouido. Snatching 17 summer bags, the person reportedly took just one cup and left the rest behind in the store.

    The move caused an uproar as the remaining 299 cups were said to go down the drain.

    The Starbucks gift items and stamp-like e-frequency rewards are being traded on local secondhand marketplace applications, including Danggeun Market.

    To collect 17 e-frequency stamps costs less than about US$75 when a customer buys 17 drinks including 14 tall-sized Americanos.

    Someone posted a pink suitcase for sale on the online Danggeun Market yesterday for $100.

    “I sold 10 e-frequency stamps that I’ve collected for $3 within three minutes of putting them up for sale,” said a 29-year-old office worker surnamed Lee.

    “I got two Starbucks chairs earlier this month, but it’s hard to explain why people, including me, have been so into the craze.”

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  • 7-Eleven marks it’s milestone with the 71,100th store in Seoul

    7-Eleven marks it’s milestone with the 71,100th store in Seoul

    7-Eleven has hit a new milestone with the opening of its 71,100th store, located in Seoul, the capital of South Korea.

    “7-Eleven’s iconic orange, green and red stripes are easily recognized in 17 countries around the world,” said 7-Eleven President and CEO Joe DePinto.

    “The company got its start because an entrepreneurial ice-dock employee saw his customers had a need and came up with a creative way to serve them. A lot has changed in how, when, and where 7-Eleven does business. But one thing that hasn’t changed is our commitment to putting customers at the forefront of all we do.”

    The brand opens a new store somewhere in the world roughly every 3.5 hours. Early last month, the first 7-Eleven in Hunan, China broke the international opening-day sales record for the company brand, reporting US$70,310 of turnover.

    With the new 7-Eleven milestone passing, the growth shows no signs of slowing. Master franchisees for India and Cambodia are expected to be taken up soon. In Asia, 7-Eleven already has networks in China, Hong Kong, Singapore, Thailand, Malaysia, Japan, South Korea, and Vietnam.

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  • Burberry bullish on Asian prospects as China and Korea slowly recover

    Burberry bullish on Asian prospects as China and Korea slowly recover

    Fashion label Burberry is optimistic about a post-Covid-19 recovery as sales began to return to normal in Asia during the June quarter.

    While same-store sales were down by 45 percent across the three months, June’s decline was 20 percent and the brand reported growth in both Mainland China and South Korea which was ahead of pre-Covid-19 levels, “albeit with some benefit from the repatriation of sales given travel restrictions,” the company said in a statement.

    Across Asia Pacific, sales were down 10 percent overall for the quarter but returned to growth in the month of June.

    “We expect it will take time to return to pre-crisis levels with the resumption of overseas travel,” said CEO Marco Gobbetti. “We are encouraged by the improving trends in all regions and the promising exit rate for June. We saw an excellent response to new product launches in recovering economies as well as online.”

    He said demand for leather goods was particularly strong in Mainland China and South Korea, bringing new, younger luxury customers to the brand, pushing full-price sales up at double-digit rates.

    In April, Burberry launched a campaign in China to promote its leather goods range, using a series of sustainable pop-up stores and using an augmented reality experience and releasing a limited-edition Pocket bag through fashion blogger Mr Bags’ WeChat account,

    “The reaction was exceptional with the limited edition bag selling out within a minute of becoming available and Pocket Bag styles overall selling out within three weeks of the campaign going live,” the company reported.

    Broader online sales at full price grew by a double-digit rate and the company is now planning a ‘social-retail store’ with Tencent which will open in Shenzhen this summer. The concept store will allow luxury customers to connect their social and online lives to their physical environments using Tencent technology.

    Gobbetti said the company believes it is “crucially important” to invest in the brand during the pandemic.

    “We will continue to embed flexibility into our plans to allow for investment into consumer-facing activities to drive growth where opportunities present.”

    At the end of June, the label had a network of 215 retail stores, 148 concessions, 54 outlets, and 45 franchise stores, excluding pop up stores.

    ‘Wise’ move to focus on Asia

    Emily Salter, retail analyst at GlobalData, said Burberry was wise to focus on rebounding economies like China, South Korea, and Japan, with the 10-per-cent drop in Asia-Pacific sales significantly less than the 75 percent in Europe, Middle East, and Africa. The latter region, she said, would likely be the most affected in the long term as tourist spending will take a long time to recover, and consumers will be less willing to buy luxury items.

    In the Americas, sales fell by 70 percent and while they improved in June, that trend is unlikely to hold as Covid-19 cases rise rapidly and state pause their reopening plans.

    Salter also praised Burberry’s digital proposition which outshone its rival luxury brands.

    “The retailer excels at using social media to engage with consumers, boosting loyalty among its young shoppers.

    “Though the future of experiential retail remains in doubt due to the impacts of Covid-19, the experience is likely to remain important among luxury shoppers, and will help cement brand identity and loyalty.”

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