Korean fast fashion brand SPAO lowers prices through cost innovation

Customers are lining up in time for the opening hours of the SPAO Myeongdong branch in Seoul. [Courtesy of E-Land SPAO]

South Korea’s homegrown fast fashion brand SPAO under E-Land Group has decided to cut the prices of its main products or keep them unchanged while inflation is picking up.

According to E-Land Group and sources from the fashion industry on Monday, SPAO lowered the price of one of its signature fall and winter products, Warm Tech Everywear, to 12,900 won ($9.62) from 15,900 won, which is the price at the time of launch in 2009.

The company has also decided to maintain the existing prices of its fleece and wool blend sweaters at 29,900 won and 30,900 won, respectively.

The prices of these two products have remained unchanged for 13 years since release in 2010. The price of its puffer, a padded jumper that has been a hit product, is still 69,900 won, remaining unchanged for five years since 2018.

SPAO’s puffers and fleeces had the lowest price tags in the industry last year, making them even more popular in the winter outwear category.

SPAO has also priced its new lightweight puffer “Light Jacket” at 59,900 won, which is nearly half the price of similar products of other brands.

The brand’s pricing policy is quite exceptional considering that the fashion industry is left with no choice but to increase prices on rising labor costs and raw material prices.

Apparel and footwear prices rose 7.8 percent in July from the same period last year after surging 8.0 percent in May, the highest rate in 31 years.

“This is the result of our cost innovation after thinking about what we can do to help people who are struggling with soaring prices,” said an official from SPAO.

“We source raw and subsidiary materials directly from the local market and use our own production factories to provide quality products at reasonable prices,” said an official from E-Land Group.

By sourcing fabrics directly and producing them in its own factories, the company is able to cut costs significantly. In particular, its production staff contacted more than 20 overseas producers and fabric suppliers to maintain the fleece price.

SPAO has also improved its inventory management through its “two-day, five-day” production method, which has significantly increased its profit margin.

The brand produces around 200 pieces of clothing in 48 hours at its domestic production base to test customer response at major stores before deciding how much to produce.

If the product is well received, global production bases in Vietnam and other locations produce the required quantity within 120 hours.