Fashion goods often cheaper in U.S.

Koreans traveling overseas are often surprised by the beautiful landscape that is dramatically different from what they experience in their homeland.
And there are other things they are sometimes astonished by, such as the relatively low prices of products, especially fashion goods.
That is because the “vendor system adds extra cost,” said Betsy Sanders in a press conference during her recent visit to Korea.
Ms. Sanders worked 25 years with Nordstrom department stores, a leading high-end chain in the United States. She is currently a consultant for the industry.
“The goods Korean department stores carry are all similar from store to store, but in the United States no two stores have the same product line.”
The vendor system is where the actual department store owner acts as a landlord, renting store space to manufacturers who are responsible for the sale of goods.
In the United States, a department store actually owns the merchandise it houses and usually takes charge of selling the products.
A Burberry’s trench coat would be priced as high as $1,000 in a Korean department store, but in the United States, the price falls to below $600.
If the buyer is willing to travel a ways, the price drops to less than $375 at outer city outlets.
The price difference is not just in luxury brands. A Ralph Lauren shirt is only $45 in the U.S., less than half the price of a similar product sold in a Korean store.
In a Korean department store, the manufacturers, or the brand owners, get to control the prices, and they are reluctant to lower them.
They are the only one selling the product, making it possible for them to dictate prices of their items at department stores. On any given day, the price for a certain product would be exactly the same at any department store in the country.
However, the system in the United States allows the distributors, or the retailers, to take charge in deciding prices, which usually brings prices down. They buy their own goods to display and bear the burden if they are not sold. With strong competition from other department stores, a retailing expert said, U.S. stores have no choice but to either lower their prices or provide better service. It’s as simple as that ― more competition, lower prices.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]