According to the Ministry of Knowledge Economy, sales of three major department stores declined 4.1 percent from the previous year in January. South Korea’s economy is likely to grow at a pace of 2.8 percent in 2013. The nation’s consumer prices have risen at a slower pace and will reach 2.5 percent this year. Private consumption will continue to remain slow due to rising household debt. The growth of the country’s retail industry will be lower than the inflation rate due to the economic downturn.

Cosmetic shopping mecca

Myeong-dong is the busiest shopping area in Seoul. The area is particular flourishing with Chinese and Japanese tourists who make up approximately 5 million visitors. The latest beauty care industry figures show that the number of beauty care stores has exceeded 100 in Myeong-dong alone.

The stores include local cosmetic brands such as The Face Shop, Missha and Nature Republic, and drugstores such as CJ Olive Young. Recently, CJ Olive Young launched the “Olive Young Lifestyle Experience Center” in Myeong-dong which is the biggest health and beauty store nationwide. This store has a floor area of 1,188 square meters, and is its fourth store in this location and 262nd nationwide.

Garosu-gil is rising as another cosmetic shopping street. Many cosmetic brands have shown interest and stores including Missha, CJ Olive Young and The Face Shop have a presence at the beginning of the street. This street has become a hot spot for global and local SPA brands like H&M and 8 Seconds as well.

Major shopping malls open

Avenue France, which is located in Pangyo, will open its doors in April 2013. The mall consists of three stories with a floor area of 27,544 square meters. Key tenants are VIPs, Cheil Jemyeonso, Blooming Garden (by SG Dining), Artisee, and a variety of luxury dining brands and lifestyle shops.

Another shopping center, which is soon to be opened, is Up Square in Ulsan. The first shopping center in this city has secured two global SPA giants, H&M and Uniqlo, and other famous F&B and fashion brands to accommodate the local community’s needs for an advanced shopping experience.

Other big shopping malls are currently in the progress of being built. Lotte World 2 is expected to open in 2015 followed by Hanam Union Square in 2016. Lotte World 2 will be the fifth-largest project in the world including Lotte World Tower (123 stories) and Lotte World Mall. The complex will also include a top-notch hotel and office buildings.

Outlook

The future of outlets in Korea seems very positive as witnessed in the cases of Lotte and Shinsegae outlets in Paju, Gyeonggi Province. Lotte Department Store decided to aggressively tap into the outlet industry and opened an outlet store at Seoul Station last February while currently operating seven outlet malls across the country. With more outlet stores coming in the future, it is expected to lead to the escalation of fierce competition between outlets, shopping malls and department stores.

By Dan Kim

The writer is the head of retail transaction, Cushman & Wakefield Korea. The opinions reflected in the article are his own. ― Ed.