‘Fast fashion’ is catching on quickly in KoreaAfter the Japanese clothing brand Uniqlo opened a new flagship store in Myeong-dong, central Seoul, last Nov. 11, long lines of Koreans waited patiently to check it out. Industry analysts didn’t think that was unusual. Koreans are keen on fashion, and the smaller Uniqlo store a block away was always busy. In addition, Uniqlo offered 50 percent discounts on the first three days of the store’s inauguration.
Analysts were surprised, however, when the company announced its sales figures. On opening day, the new Uniqlo store sold 1.28 billion won ($1.14 million) worth of clothes and accessories. That was a record. The previous holder of the one-day sales record was a Chanel boutique at the Shinsegae Department Store in the affluent Gangnam area of Seoul, which sold 460 million won worth of merchandise on its first day of business in July 2010.
“Even the head office in Japan was surprised,” said Kim Tae-woo, a marketing manager at Uniqlo Korea. Kim said 120,000 customers visited the store in the first three days and bought 3.6 billion won worth of stuff. That was 58 percent higher than the 1.5 billion won in sales that Uniqlo’s Gangnam store enjoyed during its first three days of business last October.
The comparison with Chanel is particularly enlightening, analysts say. Every customer at Chanel spends a significant amount of money, while at Uniqlo they can make a purchase for 20,000 won or less.
Which shows that “fast fashion” - casual, reasonable clothing that rapidly adopts the latest trends from the fashion catwalks - is the biggest thing in Korean fashion retailing.
“This figure reflects the growing popularity of fast fashion in Korea,” said Kim of Uniqlo. “We have set a goal to increase the number of Uniqlo outlets to 300 and have sales of 1 trillion won in 2014 in Korea. This industry will continue to thrive as more people look for high-quality clothing that reflects the latest trends and sells at reasonable prices.”
Although many Korean shoppers are still obsessed with luxury brands, the lower end is also gaining a devoted following, especially as a new middle class emerges with disposable income and fast-changing fashion tastes.
Uniqlo was the first fast fashion brand to enter the Korean market in 2006. In the 12 months leading up to August 2011, the company had a total of 360 billion won in sales, 12 times higher than its 30 billion won in sales in its first year.
Uniqlo was followed by other fast fashion chains including Spain’s Zara; Sweden’s H&M; and Forever 21, the American brand started by Korean businessman Chang Do-won and his wife Chang Jin-sook. They compete in the lanes of Myeong-dong and the boulevards of Gangnam, which are known for notoriously high rents.
“Myeong-dong has emerged as the country’s fiercest battleground for fast fashion retailers,” said Lee Joon-hwan, a senior researcher at Samsung Economic Research Institute. “In the case of Inditex, which owns the Zara brand, when it first enters a foreign market, its core strategy is opening the first outlet in a hot commercial area despite high rents, because those areas are rich with a floating population. Other fast fashion retailers also take this strategy.”
Following Uniqlo’s launch in Myeong-dong, Zara, Gap, H&M and Forever 21 opened stores in a short period of time.
“Myeong-dong is where 1.5 million people visit on a weekday and over two million people on Saturdays and Sundays, so it’s perfect location,” Lee said. “In a 200-meter [219-yard] radius, there are three Zara stores, two Uniqlos and two H&M outlets.”
According to the Financial Supervisory Service, Zara Korea had 133.8 billion won in sales in 2010, up 75 percent from 2008. Zara entered the Korean market in October 2007.
H&M Korea, which entered the market in 2010, had sales of 37.2 billion won that year.
On Saturday, Zara opened a new outlet in Garosugil in southern Seoul, not long after Korean-American fast fashion brand Forever 21 opened a store there.
When Shinsegae’s Incheon branch was reopened in April 2011 after 21 months of redecoration, it made headlines for putting outlets of H&M and Louis Vuitton on the first floor.
“This is the first department store in the world where a French luxury brand and a Swedish fast fashion retailer are situated together,” said an official from Shinsegae.
The first floor of department stores in Korea are traditionally reserved for luxury brands.
According to Shinsegae, the H&M outlet occupies 2,300 square meters on three floors of the Incheon branch, whereas Louis Vuitton occupies 460 square meters on the first floor.
The Swedish brand has its own separate entrance on the ground floor.
Fashion meets technology
Fast fashion retailers were seen as selling cheap clothes until Uniqlo changed that perception.
Yanai Tadashi, CEO and founder of Fast Retailing, the parent company of Uniqlo, said in an interview with the Korea JoongAng Daily in November that Uniqlo differentiates itself by the power of global networking in its manufacturing process.
“Uniqlo developed a niche for fast fashion by making clothing that combines Japan’s cutting-edge fiber technologies with China’s low-cost production power,” Yanai said.
The Japanese fast fashion giant has developed what it calls “new functional materials” with Japanese fiber manufacturers.
In partnership with Toray, Uniqlo developed Heattech underwear that generates and retains heat from a person’s sweat while maintaining a dry and soft feel.
“I stopped wearing traditional skin-colored underwear because it’s uncomfortable and thick and makes look me fat,” said Lee Ka-young, a 28-year-old office worker. “But I wear Heattech because the fabric is light and warm. It’s interesting how a Japanese brand came up with the idea of blending fiber technology into clothing, something never tried by other clothing retailers.”
By Kim Mi-ju [firstname.lastname@example.org]
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