Selling luxury in a changing KoreaIn the fashion business, resurrecting a defunct brand takes more than faith. And in fad-conscious Korea, whether such a brand can get a second life may depend on who does the job, and how.
A year ago, the fashion import company Wearfun International Inc. took on the Versace account, and the job of reversing the local fortunes of that Italian brand, which had long been considered moribund in Korea’s luxury market. Wearfun’s president, Kwon Gee-chan, largely attributes Versace’s failure here to mismanagement within the Italian company following the 1997 murder of its founder, Gianni Versace.
But he also thinks the brand was overexposed by its previous importer. He shakes his head to hear that Versace keychains were once offered as freebies by local phone companies. “The company was too ambitious, and overextended the brand in the Korean market,” he says.
In his Apgujeong-dong office, Mr. Kwon seems to be in constant motion. A former president of the Korea Import Association, his experience with the local luxury fashion market dates back to its beginnings in the 1980s, when he began importing the Kenzo brand.
“That was when the Korean government first allowed fashion goods to be imported,” he recalls. “There were no such concepts in business as ‘buying’ or ‘merchandising’ then.”
At that time, there were about a dozen importers who saw potential for luxury brands in Korea. These companies acted as agents for import brands like Gucci, Pierre Balmain and Ungaro, among others. Mr. Kwon asserts that these agents are the unheralded pioneers of high-end fashion in Korea.
For a decade or so, he says, he and his colleagues were widely viewed as a “social evil” because they promoted extravagance. “We used to have a group of housewives demonstrating in front of our company and department stores, demanding that the stores be closed down,” he says.
His office, he says, was routinely ransacked by tax officers. “Without any notice, they just turned up at my door, flashing a sheet of paper,” he says.
“Normally, such a warrant was issued only when criminal activities had been confirmed, or someone had tipped them off. I had absolutely nothing to hide, and they found no proof each and every time, but the raids continued.” He says he sometimes had to visit the tax office to retrieve his personal belongings.
This hostility diminished over the years. But then the financial crisis of 1997-98 arrived, which drove several of Mr. Kwon’s fellow importers out of business. Mr. Kwon stayed afloat, however. One might expect him to attribute his endurance to his business acumen, but he says it’s his love for shopping.
“You know what? Shopping is my most enjoyable pastime,” he says. “And for me, there is immeasurable pleasure in seeing customers buy what I’ve chosen for them. Even if I have hired buyers and merchandisers, I still travel with them to showrooms everywhere and buy clothes, for my customers and for myself.”
His penchant for bold colors and contrasts in design ― when interviewed at his Apgujeong-dong office, he was wearing a plaid Kenzo blazer, sky-blue shirt and taupe tie ― is reflected in the brands he imports. Rather than conservative names like Hugo Boss or Armani, he works with flashier brands like Kenzo and Iceberg.
“For a long time, I’ve understood the culture of Versace as ultra-luxurious, daringly sexy and very classy at the same time. And its clothes are bold and colorful,” he said. “I thought I could work with the brand when the proposal came through.” Wearfun, which has a staff of about 200, currently imports 11 European brands besides Versace, including Iceberg, Aigner, Sonia Rykiel and Paule Ka.
He said he decided to take on Versace’s Korean business after a crucial management change in the Italian company, which brought in Giancarlo Di Risio from Fendi and a new design team from Louis Vuitton, Dolce & Gabbana and Gucci.
His plan for the brand involves correcting the previous overexposure by selling it only at a few choice locations. When Wearfun took over the account in March of last year, Versace had 10 outlets. One was as remote as Cheonho-dong in far eastern Seoul, at the Hyundai Department Store there.
Wearfun closed all 10 of those locations and, last month, brought the brand back with a boutique in Galleria Department Store in Apgujeong-dong, followed by another in the Hyundai store in the same fashionable retail district. This Friday, a Versace boutique opens at Lotte Department Store in central Seoul. That will bring the number of Versace locations in Seoul to three, and Mr. Kwon plans to keep it that way, at least for now.
Born and raised in Daegu, Mr. Kwon says he was a fashion maverick as early as middle school. “I was one of a very few boys who saved pocket money and bought clothes at thrift shops and markets,” he says. “When everyone else wore, at most, 16-inch-wide bell-bottomed pants, mine were 18 inches.”
His first job out of college, for a construction company, took him to Saudi Arabia for two years, where he spent his spare time clothes-shopping and guiding Korean visitors through arcades and malls. He was so well-versed in fashion that a shopping center offered him a job.
When department stores began opening in southern Seoul in the mid-1980s, his Korean employer offered him a chance to work on the idea of importing fashion brands from abroad. That project didn’t come through, but he ventured into the field on his own, starting his own trading company.
Mr. Kwon takes it personally when local fashion media, as he sees it, slights him and his fellow importers in favor of the Seoul-based employees of brands like Chanel, Gucci and Louis Vuitton, which handle their Korean sales and marketing directly rather than work with a local importer.
“Even within the market, local companies like mine, with Korean investment and local staff, compete against foreign brands that spend a fortune building impressive and costly flagship stores, which I doubt bring real profit,” he says. “But because of their fancy packaging, local magazine editors treat those hired big-name brand managers as more important than real CEO/owners like myself.”
This year, he says, he expects Wearfun’s sales to total 45 billion won ($45 million) in 60 stores and 10 duty-free locations in the country. Versace has expressed confidence in the company. “We are convinced Wearfun International is the partner to do this, as Korea is an important market to us where we want to focus and concentrate our energies and plan to expand in the future,” said Versace’s spokesperson in Italy, Emanuela Fioretto.
In the past two decades, Mr. Kwon has seen the Korean attitude toward luxury goods change from hostility to an enthusiastic embrace. He expects the market to mature further. “What we see in the Japanese consumer market normally takes place in Korea about five years later,” he says. “And the only difference at the moment is the currency.
“If a Japanese teenager saves for two or three months to buy a Prada or Louise Vuitton bag, then for a Korean girl, it takes a little longer, maybe six months.”
What drives this desire for luxury goods? “Sadly enough, it’s the power of marketing, which ‘brainwashes’ consumers through various methods,” he admits. “We have our special strategies that make sure our customers fall head over heels for, say, a new Versace bag, and remain loyal to the brand for seasons to come.”
by Ines Cho