A bargain or rip-off?

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A bargain or rip-off?

Here’s this week’s tip on Korean language and customs:

Q:
Having lived in Korea for some time, I am constantly amazed at the huge reductions offered by department stores and specialty clothing shops at seemingly random times of the year.

In England, sales are usually held in January and late autumn, offering discounts of up to 20 percent at best, yet here in Korea I routinely see offers of up to 80 percent off a wide variety of selected goods.

What’s going on? Are retail prices fixed with such a huge margin that shops can do this and still make a profit?

A:
Most large-scale shopping centers and stores base their business structure on real estate. Instead of operating their own retail shops, they simply rent out space to various companies. This kind of business model is not new in Korea but generates huge overhead costs for the shops.

Stores located on some of the most expensive pieces of land in major cities customarily pay extremely high rents, up to 60 percent of their total sales.

Companies that fail to keep up with such high costs end up holding bargain sales in order to rake in cash to stay in business.
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