To boost revenue, Korea's fashion industry looks to independent designers

[한겨레] Independent brands now making their way into department stores, which had been mostly closed off to them

By Kwon O-sung, staff reporter

A new spring wind is blowing through department stores, which have long been regarded as the sanctum of established fashion brands, with the arrival of independent brands that made their beginnings on the street and online. Big retailers are also are eying the small, independent designers based in Dongdaemun Fashion Town, which have innovative plans and are able to respond quickly. The retailers think they might provide a breakthrough for revenues in the fashion sector, where growth has largely stalled, and serve as an engine for future growth.

Among the stores at the Gimpo Airport branch of Lotte Mall, a shopping mall operated by Lotte Asset Development, Mill Studio was the brand with the highest proceeds per unit area as of Feb. 26. The company behind Mill Studio, the brand that beat out the flashy mainstream brands and SPA (special retailer of private-label apparel) brands from overseas, is Mill&I, a medium-sized fashion company that got started in Dongdaemun, Seoul. It raised its sales-per-unit area (3.3 square meters) from 3 million won (US$2,761) at the time of the shop's opening in Jun. 2012 to 8 million won (US$7,363) by Dec. 2012.

Independent brands are also causing a sensation at department stores, which are the gold standard of the retail industry. In the 2013 spring season alone, Lotte Department Store is planning on opening an additional 44 in-store shops across the country for six existing independent brands and thirteen new brands, or 19 brands altogether. The number of brands that were introduced in 2012 was 18, adding up to 52 in-store shops.

In Oct. 2012, Shinsegye Department store held an explanation event at which it gave opportunities to partner companies who are interested in opening shops inside department stores, outlets or other major retailers. Before that, in Mar. and Apr. 2012, Shinsaegae Department store opened a shoe store for up-and-coming designers and a contemporary clothing shop, at its main department store and Gangnam branch, respectively. These served as a stage for hot new designers from Garosu street, a fashionable area in Gangnam, and the Cheongdam neighborhood in Seoul to present their products more professionally. And in Oct. 2012, Hyundai Department Store gave the green light for a women's casual brand that had previously been sold online to open a full-fledged shop in its Sinchon branch, a first for the industry.

The attention that mainstream retailers are paying to independent brands is being seen as a shift in strategy to view the brands as a method for revving up growth in fashion revenues, which have hit a plateau.

"The Korean fashion market will maintain a low-growth trend of 2.6% into 2013," the Samsung Fashion Institute predicted. "We will see local brands achieving greater competitiveness and brand differentiation, especially among women's SPA brands."

Choe Min-do, managing director at a fashion research institute run by Shinsegae Department Store, said, "Department stores will offer customers new products as they continue to discover and attract leading designers."

Behind these changes is the growing power of the independent fashion designers of Dongdaemun, which boasts the world's largest concentration of fashion manufacturers and retailers, as well as Samcheong neighborhood and Garosu street.

"Competitiveness is based on a response system that can keep products as new and different as possible," said Kim Sang-dae, director of sales at Mill&I. "We can do this thanks to the night-and-day two-shift retail system of Dongdaemun, which allows us to produce clothes that customers want during the day and sell products at night."

There are also some who argue that collaboration between the established and independent sectors of the fashion world should be viewed as an opportunity for development of the domestic fashion market.

One such person is Lee Ji-eun, CEO of With Base, which came into existence in Dongdaemun and is currently operating four in-store shops at Shinsegye department store. "There are many small businesses in Dongdaemun that are competitive, and yet are having a hard time taking off because of a lack of understanding of how retail works," Lee pointed out.

Interested in the talent of such fledgling designers, Lotte Asset Development is planning on opening a new Dongdaemun branch in May 2012.

"It's true that the market dominance of established brands and commission fees have made it hard for independent brands to open up shop inside department stores," said Park Yeong-su, deputy general manager of the Korea Fashion Association. "As consumers preferences become more diverse, there is more room for big retailers and independent brands to collaborate."

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