Traditional markets shopping for customers

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Traditional markets shopping for customers

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Gwangjang Market, crowded with visitors on a weekend, has been designated as a special market by the Small and Medium Business Administration as part of an effort to nurture and support traditional markets. By Park Sang-moon

Eager to win back former customers and attract new ones, major marketplaces in Seoul have made a lot of changes lately.

Jet black plastic bags have been replaced by reusable fabric bags with traditional patterns. Indie bands and trot singers are luring shoppers to Hongseong Traditional Market, South Chungcheong. Misting systems have been installed to cool down shoppers during the scorching summer season.

Some marketplaces have gone even further.

After a yearlong face-lift, maze-like narrow alleys have been paved with concrete and moving walkways, shopping trolleys and an indoor playground for children have been built in the modern three-story Hayang Gongseol Market, North Gyeongsang. The remodel was the biggest change in the market’s 82-year history.

Also, many traditional markets are now offering delivery services.

The costs for these changes are partially paid for by the Small and Medium Business Administration, a state-run organization that is in charge of supporting traditional markets. The SMBA also provides reserved staples such as cabbage and garlic at discounts of between 70 to 90 percent so that the traditional markets can compete with their giant archrivals - big-box chain stores.

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Also, the SMBA has allocated five billion won ($4.4 million) in marketing costs and an additional 18.2 billion won this year to nurture about 45 traditional markets throughout the country as tourism-oriented markets. Part of this money is used to print directional signs and brochures in foreign languages at those markets.

“They can’t be discount stores but we help these traditional markets catch up to their rivals and go on ‘buy-one-get-one-free’ promotions within the budget of [SMBA’s] marketing costs,” said Na Young, an official at the Agency for Traditional Market Administration, an affiliated organization of the SMBA which is responsible for promoting and marketing works related to traditional markets.

“It varies depending on what type of project each market wants to organize but up to 90 percent of the cost is covered by us.”

The government has also given consumers an incentive to shop at traditional markets: Starting this year, larger tax refunds are guaranteed to those who spend more at such markets.

Large stores shut down

Large discount stores also shut down twice per month. The twice-per-month mandatory closure was first adopted by local governments as a way for larger stores to “coexist” with smaller vendors, but the National Assembly later reformed a related bill and enforced the closure across nationwide discount stores. It was put into practice in April 2012.

The SMBA has spent 1.6 trillion won on supporting traditional markets from 2002 to 2011 by upgrading their facilities and supporting promotional events.

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Many efforts are being made to lure shoppers to traditional markets. From left, this bag was made for a one-time promotion by the Visit Korea Committee; Nambu Market in Jeonju opened its vacant second floor to young entrepreneurs with new shops and ideas who are luring new customers; Hayang Gongseol Market, North Gyeongsang, went through a remodel to make the 82-year-old market look like a discount store; and Tongin Market in Jongno, central Seoul, revived a flagging interest in the market by coming up with a new lunch buffet. Photos provided by Visit Korea Committee, JoongAng Ilbo and Park Sang-moon

Despite all this support and effort, however, sales of traditional markets keep decreasing and they are struggling to attract shoppers.

According to a report written by Choi Yun-jeong and Jung Jin-ook, economic professors at Yonsei University, discount chain stores lost 230.7 billion won per month on average due to mandatory shutdowns last year, but traditional markets and small grocery stores earned between 44.8 and 51.5 billion won of monthly profit on average, meaning traditional markets are not primary options for consumers when large discount stores are closed.

Instead, convenience stores and online grocery stores achieved double-digit sales growth in 2012 compared to 2011.

Salespeople part of the problem

A major reason behind traditional markets’ lower-than-expected sales is salespeople who do their business the same way they did decades ago.

“The nation’s retail industry faced a huge wave of environmental change with the advent of discount stores in the late ’90s, but traditional market vendors failed to read the changed preferences of customers,” said Lee Kap-soo, a research fellow at Samsung Economic Research Institute.

He recently published a report analyzing 30 successful salespeople of traditional markets in Korea, Japan and China.

“No matter how small their shops are, these salespeople are owners. They might have their own business tactics but they are not always working right,” Lee said.

“Instead of focusing on upgrading market facilities, the salespeople should think about ways to change their mind-set and differentiate their shops. If they can offer things that are unique and different, people would come and shop even if these traditional markets are less convenient than discount store chains.”

The National Assembly Budget Office also said in a report last year that, “Without efforts of salespeople [to change themselves], it is hard to bring fundamental changes to traditional markets, no matter how the facilities are updated.”

The report revealed that 65.1 percent of shoppers said they are not willing to visit traditional markets because of “problems that originate from salespeople themselves.”

Choi Yu-jeong, a housewife in her early 40s who regularly visits discount stores in her neighborhood of Sinsa-dong, northern Seoul, said, “You have to pay extra fees for using the parking lot, most of the shops only take cash and almost all don’t allow exchanges or returns.

“In addition, salespeople sometimes frown at me if I just browse or check the conditions of their products. It is not a problem of a single store, but it is a quite common problem all the traditional markets face. Who wants to shop under such circumstances?”

During a recent visit to Gwangjang Market in central Seoul, the popular market was crowded with locals and travelers even though it was a weekday afternoon. From pig heads with smiling faces to stacks of finger-sized gimbap (rice wrapped in dried seaweed), the market, famous for street food stalls, was full of bustle.

But not everyone was happy with the market. Kim, who wished to be identified only with her surname, can’t forget the day when she and her boyfriend ate tteokbokki (spicy rice cake) at one stall in the Gwangjang Market.

“I asked the saleswoman to give me a cup of water but she ignored me three times. What offended me the most was when she abruptly moved our tteokbokki plate to the left without my consent in order to wipe the table,” said Kim, who is an office worker in her 30s.

“As she did so, she spilt water and sauce of the tteokbokki over the table. All the chopsticks also fell to the ground.

“Although I live in Ilsan [Gyeonggi], I often visit Gwangjang Market because I like bindaetteok [Korean-style pancake] there but I never met a kind merchant. You should appreciate it if the salesperson is not rude.”

Ironically enough, the government’s tagline when it promotes these markets is “jeong” which roughly translates to affection. They say markets are where people can feel and experience the jeong of generous merchants.

It’s also ironic that Gwangjang Market is designated as a tourism-oriented market. Located in the heart of Seoul, the market is frequented by non-Koreans, but most shops don’t specify the prices of their products, although they are required to do so.

In an attempt to get salespeople to change their behavior, the Agency for Traditional Market Administration has organized a two-day merchant’s college, in which vendors receive lessons on work ethics and learn how to display their products and treat their customers. Vendors must apply for the free course.

Another reason behind traditional markets’ sluggish performance is a lack of variety.

“By looking at all these mom-and-pop stores from the economic point of view, the market is already saturated. There are simply too many shops, all with similar items,” said Chah Eun-young, a professor of economics at Ewha Womans University.

“Everything goes franchise when the economy is developed and it is a worldwide trend. What’s the use of prolonging the life of struggling small stores?

“The government is shelling out but there are no tangible outcomes because the aim of the project is vague. What’s more important here is not helping them manage to stay alive, but letting them gain competitive edges. Consumers can’t shop as if they donate out of sympathy,” added Chah.

Lawmakers and the media often describe small retailers as victims of large discount store chains - and subsidies are provided on the premise that these small retailers should be protected.

Fresh ideas

Slowly but steadily, however, traditional markets are finding ways to become competitive.

Tongin Market, in Jongno, central Seoul, has come up with a killer idea: a lunchbox buffet.

Before the lunchbox buffet, the market was almost dead.

“We were once driven to the worst case scenario. A few residents live around this area and discount stores and super supermarkets also opened one after another,” said Shin Kye-soon, who works at the lunchbox buffet as a manager.

“To make matters worse, nearby old apartments were demolished. The only customers we had back then were women in their 50s and 60s.

“So we thought about ways to attract tourists around this area because the market is located right next to Gyeongbok Palace and Seochon [the area west of Gyeongbok Palace where traditional Korean houses are clustered]. We decided to make the best use of the many banchan [side dish] shops we have,” added Shin.

In order to make the side-dish-hunting experience fun, Tongin Market came up with the idea of using replicas of old brass coins from the Goryeo (918-1392) and Joseon (1392-1910) dynasties.

Customers buy the coins, which each cost 500 won, and receive an empty plastic tray. Then, they explore every nook and cranny of the market in search of things they wish to eat for their lunch. They’re able to buy small portions of treats at member shops with one or two of the coins. When they finish their food hunting, they return to the cafe and buy a bowl of rice and guk, or broth.

The lunchbox buffet became an instant hit.

On weekends, the cafe greets up to 2,400 people, from young couples to family visitors.

The buffet even attracts people who never visit such traditional markets: middle-aged men in their late 30s and 40s. Ahn Jin-seok, who was eating at the cafe with his peers, said, “It’s my first time visiting this kind of traditional market but I’m very happy with this meal. It’s good, hearty and fairly cheap.”

Nambu Market in Jeonju, North Jeolla, also succeeded in drawing new and younger customers by giving the second floor of the market to young entrepreneurs.

As is the case with other traditional markets, the history of Nambu Market dates to the early Joseon Dynasty, but the market started going downhill in the mid ’90s with the advent of discount stores. Trying to keep from suffering the same fate as other traditional markets, Nambu Market decided to use a fresh approach.

Thus, the Real New Town project was born. After the market recruited young entrepreneurs with unique business ideas, about 20 shops filled the formerly deserted second floor, including a taco place, cafe, plant store and handmade accessories shop.

“The market has become a lot different [after the Real New Town project],” said Hwang Sang-taek, a manager of the market. “In the past, it was hard to see young people coming to the market but now we see a lot more young customers. And market people also try to change their type of business to cater to these younger shoppers.”

Thanks to the Real New Town, restaurants that are located on the first floor of the Nambu Market saw about a 30 percent sales increase year over year.

“By looking at the change, we realized we can’t stay the same but [need to] change,” added Hwang.



BY SUNG SO-YOUNG [so@joongang.co.kr]
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