Electro Land, Techno-mart revamp retail efforts

Ten minutes after stepping into Electro Land 21, a towering electronics mall in the Yongsan district of Seoul, Moon Seok-min was openmouthed with surprise. Mr. Moon had come to buy a flash memory card for his digital camera ― an easy enough task in one of Seoul’s busiest electronics shopping areas. But he hadn’t expected to stumble on the “Digital Palace” that showcases state-of-the art goods made by Samsung Electronics Co. “The Digital Palace really attracted my attention,” said Mr. Moon, 20, who liked the fourth-floor showroom that allows visitors to try firsthand a variety of high-technology products. “The shop owners who used to crowd narrow alleyways and who used to push their products are gone,” marvelled Mr. Moon. “This redeveloped Yongsan electronics market area makes a totally different impression on me.” Many of the old shops that were clustered in the district’s alleyways are gone. In their place is Electro Land 21, a huge mall with a modern interior and cutting-edge facilities. Shop owners often let customers try out computers and other electronics goods before buying. Since Electro Land is outfitted with wireless technology, Mr. Moon was able to sample a Wi-Fi laptop to log onto the Internet without being connected to a wall outlet. Construction on the Electro Land 21 building was completed at the end of 2002. But the sweeping, fundamental changes are still going on. The Yongsan mall is changing from an old-fashioned market selling home appliances to a multi-purpose digital shopping destination that features cultural amenities as well as information-technology products. Attractions include an eight-screen cinema complex, demonstration centers for Sony's PlayStation 2, dining facilities and a fitness center. Electro Land is hardly alone. Techno-Mart, in southeastern Seoul, draws customers with similar attractions. The 39-story building is packed with people day and night, some shopping for electronics and others going to movies or grabbing a bite to eat. The sixth floor of Techno-Mart, which used to feature a variety of electronic products, is now dedicated to mobile handset sales. All 250 stores on the floor compete to sell the latest models of cellular phones. “For a long time, Techno-Mart was considered a shopping center simply for home appliances. But shop owners are expanding into high-tech electronics goods with the intention of turning the mall into an information technology mecca,” said a Techno-Mart official. As Korea’s top electronics malls, the Yongsan electronics shopping district and Techno-Mart are rapidly changing to suit their clientele. The key words are “young” and “digital.” The malls are trying to attract younger customers and encourage them to purchase more. That’s one of the reasons behind putting movie theaters and food outlets into the shopping malls. “Old-style marketing strategies no longer attract young people,” said Kim Dae-kyoung of Techno-Mart’s planning department. “Our goal is to create a mall that offers cultural facilities and a comfortable shopping environment specializing in information technology equipment.” These new marketing approaches appear to be reaping rewards. Techno-mart says that it has had an increase of roughly 1,500 customers in their 20s each day. That figure represents a 40 percent increase over last year. The change in focus to younger buyers is spreading to the smaller shops in Yongsan. An increasing number are stocking mobile phones, computers, digital cameras and other IT equipment rather than the mainstays of appliances, switches and cable. Techno-Mart, meanwhile, has long been outfitted with a cinema, a golf practice range and restaurants, and has long had a following among teens and young adults. Many retailers are switching from appliances, the former mainstay of the mall, to information technology goods. “There are now 560 shops specializing in personal computers and information technology equipment, while home appliance shops, including imported household appliances, has fallen to around 300,” said the owner of a laptop computer store. Like Techno-Mart, Electro Land 21 has dedicated its fourth floor to mobile phone shops. To date, 89 handset dealers have opened there. And throughout Yongsan electronics market, there has been an increase in the number of shops selling mobile phones. “These days, the decision makers are teenagers and twentysomethings, no longer their parents in their 40s,” said Park Sang-hu, a managing director of Techno-Mart. “So, electronics malls are quickly responding to the newly emerging purchasing power of young buyers by moving from mainstay appliances to high-technology products.” The back streets of Yongsan have a niche market that the malls can’t or generally don’t want to touch: “no-name goods.” “Small profits and quick returns are the strengths of the Yongsan electronics shopping district,” said Song Il-seok, who runs an assembly shop for personal computers in Yongsan. “Shops in Yongsan have stood for lower prices.” Prices of “no-name” assembled computers with Intel Pentium IV microprocessors are roughly around 1 million won ($833), or about 100,000 won cheaper than brand-name computers assembled by Samsung Electronics and Trigem Computer Inc. In Techno-Mart, “no-name” mobile phones, which are 10,000 won to 100,000 won cheaper than brand phones, can be found by combing shops in the mall. Both Electro Land 21 and Techno-Mart still are hot spots for home appliances. A 29-inch cathode-ray tube television set can be purchased for about 380,000 won, while a flat -screen television of the same size costs 630,000 won. Customers get large discounts if they make blanket purchases of electronic goods and appliances. This price competitiveness ― the essence of large-scale electronics shopping centers ― is being eroded by the rapid growth of Internet shopping. Consumers now visit Techno-Mart or the Yongsan electronics shopping market after thoroughly searching information about prices on price-comparison Web sites. Retailers at both malls say they have had problems because of inaccurate price lists that are posted on the Internet. “More than half of all customers coming to our shops have already found out the lowest price on the Web. Then they demand more discounts,” said Song Il-seok, a shop owner. “But such a low price on the Web is only possible when dealers sell products illegally without paying value-added taxes,” he said. “If retailers sell products at those prices, they’d soon go out of business because there are no margins in sales. Unfair transactions listed on the Web are hurting the businesses of retailers in electronics malls.” The shop owners at Techno-Mart and the Yongsan electronic shopping district are planning to form a nationwide electronics retailers association in alliance with regional electronics malls in Pusan and Daegu. The association plans to work for the eradication of transactions that evade value-added taxes. “Education about unfair transactions will make people turn their backs on those illegalities. And, cooperative marketing activities will attract more people to electronics malls,” said one retailer. Meanwhile, a different battle is in the making. Techno-Mart shops are pursuing a fixed-price policy, which is different from Yongsan, where discounting and low margins have long been a way of doing business. “Most shops in Techno-Mart are trying to sell goods at their list price in a bid to enhance the transparency of business transactions,” said a Techno-Mart employee. “But consumers continue to beat down the prices.” by Kim Jong-yoon