Surviving against Korea’s retail giants
One of the most recent and largest changes in investment patterns by domestic and foreign investors is a shift in the main investment target. Investors went heavily into commercial real estate figuring that office properties were the most stable and reliable sources of investment returns. As a result, there is an oversupply of office properties. And now investors are turning to retail properties.
My answer to that commonly posed question is: “The retail property market is definitely promising, but only with thoroughly planned survival tactics.”
It is technically feasible to compete against local retail giants - the department stores, discount stores and mega-size retail chains like E-Mart and Homeplus. Since those retail giants dominate local markets with their financial clout and national scale of their distribution networks, it is extremely difficult to successfully squeeze into the market while keeping up with new trends and the needs of customers. It’s a lot different from the office building market and requires professional knowledge and experience in retail.
UP Square, which opened in May at the hub of the most populated and developed commercial district in Ulsan, a city south of Seoul, is surrounded by major department stores. So UP Square has distinct and exclusive marketing plans, such as the introduction of all-new brands that are distinct from the brands found in department stores. Its vision is to create a variety of new market trends, rather than to share the pie of retail sales with other local retail stores. In fact, residents of Ulsan have the highest average income in the country and used to travel to other cities to take advantage of their shopping and recreational facilities. The out-of-town shopping rate was approximately 35 percent, which is much higher than the national average.
Understanding this fact and the needs of locals, the mall included a multiplex CGV movie theater and family restaurants, and the store lots are more spacious than the ones at department stores. In addition, a lot of effort was put into the retail trade mix to include retail brands that are thriving in Seoul in order to avoid brand duplication with department stores.
Avenue France Pangyo opened last April. It is a street mall that features premium dining restaurants within a multipurpose apartment complex based on a Parisian theme. The usual store arrangement in a mall consists of clothing and general goods stores rather than restaurants. But Avenue France has taken the strategy of targeting nearby residents by reducing the number of fashion and general goods stores while increasing the number of high-end restaurants to compete against major retail stores.
In other words, the locals in Pangyo and Bundang, south of Seoul, do not have to travel all the way to hip, international neighborhoods like Itaewon or Garosu-gil in Gangnam anymore. They can enjoy quality brands in their own neighborhoods.
This exclusive targeting of niche market provides customers with goods and services they do not receive from department stores and avoids direct confrontation with supersize distribution giants.
One of our unique marketing strategies for UP Square and Avenue France is to entertain and attract potential customers with culture and music. Instead of starting a price war with competitors during the main discount seasons, our focus is to create a new trendy place for the youth market and create an image among shoppers that UP Square is an entertaining destination for all types of people.
To achieve this, our marketing managers at UP Square have been inviting celebrities to lead concerts for local customers who wouldn’t normally have the chance to see famous celebrities. We arrange special stages for small concerts by busking bands, piano trios, B-boy dance groups, fashion shows and local charities to provide a unique shopping experience to customers. It is very rare to see couples and families sitting on a bench enjoying music in other stores, and it shows our efforts to add music to the shopping experience for customers at the mall. Furthermore, our team organizes local charities and volunteer programs to use the mall, creating a space that is 100 percent dedicated to the needs of locals.
Unfortunately, while demand is sky-rocketing for retail property management, the number of retail specialists who can meet the demand is quite limited. Under these circumstances, last year’s successful launch of three major property management service achievements - UP Square, Avenue France and Seoul Square - truly meant a lot to C&W Korea and me.
One might say that systematic and well-planned tasks are the key element for successful property management, but it is important to understand that those systems are made by people and they are not achievable without dedication and passion. This is why the importance of dedication and passion from the managers cannot be overstated.