The document provides an overview of the fashion market in South Korea, including business opportunities for Finnish companies. It discusses the growing Korean economy and demographics, noting trends toward single-person households and increased online shopping. Major distribution channels like department stores and online retailers are analyzed. The market is segmented into clothing, shoes/bags/watches, and home furnishings. Overall opportunities exist in casualwear, sportswear, bags, and Nordic lifestyle products due to their simplicity and sustainability. Finnish companies should consider online channels and curation services to target younger consumers in South Korea.

1. 2015/11/1
2
©
Finpro1
asads
Fashion
market
overview:
South
Korea
Business
opportunities
for
Finnish
companies

2. Authors
• Finpro
Korea
:
Yoon-­‐Mee Kim,
Trade
Commissioner
• Partner
Consultant
:
Youngmoon Kim
• November,
2015
2015/11/1
2
©
Finpro2

3. 2015/11/12 © Finpro3
Contents
1. Executive
Summary
2. Market
overview
• Economic
growth
• Demography
• Distribution
channel
• Trend
in
Korea
3. Distribution
channel
analysis
4. Market
segmentation
• Clothing
• Shoes
/
Bags
/
Watch
• Home
furnishing
5. Conclusion
and
Recommendation

4. 1.
Executive
summary

5. 2015/11/12 © Finpro5
Market
Overview
With
the
“Korean
Wave”
in
Asia,
Korea
influences
the
consumer
behavior
and
business
volume
in
other
Asian
markets.
-­‐ Recently,
since
Yóukè (Chinese
tourists)
who
visit
Korea
has
increased
radically
the
popular
brands
in
Korea,
the
market
has
been
popular
in
the
Chinese
market
naturally.
EX.
New
Balance’s
entry
into
the
China
through
the
‘E-­‐land’
company
of
Korea.
1
In
the
last
20
years
the
proportion
of
1-­‐2
person
households
in
the
total
households
has
increased
more
than
double
and
that
ratio
already
surpassed
the
half
in
2015.
-­‐ Among
the
single-­‐person
households,
people
in
the
30s
account
for
29.9%.
-­‐ Types
of
housing
development
and
supply
surging
for
the
1-­‐2
person
households.
-­‐ The
1-­‐2
person
households
had
activated
the
near
distribution
channels
and
online-­‐shopping.
-­‐ Among
the
single-­‐person
households,
people
in
age
30s
tend
to
spend
more
than
other
age
group
compared
to
their
income.
2
Korea
is
one
of
the
most
connected
countries
in
the
world
in
terms
of
internet
/
smartphone
usage
-­‐ 2015
mobile
shopping
size
expected
to
be:
20
billion
USD.
(Mobile
fashion
market
3
billion)
-­‐ Among
growing
distribution
channels
only
the
online
channel
is
enjoying
double
digit
growth
(14.3%)
-­‐ Smart
consumers
are
using
the
internet
to
compare
prices.
3
The
population
of
Nordic
lifestyle
products
-­‐ Once
the
simple
and
practical
design
and
sustainable
consumption
came
to
the
fore,
Scandinavian
design
and
lifestyle
products
(which
is
appropriate
for
that)
gained
popularity
naturally.
-­‐ It
gives
fresh
impression
because
the
lifestyle
in
Korea
is
generally
more
discreet
than
for
example
U.S.A
and
mainland
Europe
4

6. Distribution
channel
2015/11/12 ©
Finpro6
Department
store:
Department
stores
are
not
the
‘must
channel’
any
more,
especially
for
small
Finnish
brands.
-­‐ Success
in
the
Online
channels
can
enable
the
brands
to
have
better
terms
and
conditions
from
the
department
stores
these
days.
-­‐ A
low
growth
of
2-­‐4%
(
4%
in
2014
due
to
Chinese
tourists
(Yóukè)
)
1
Outlet:
Outlets
sale
is
12.7
billion
USD
-­‐ Commission
to
Outlet
:
18-­‐25%
/
Ordinary
outlets:
66,
Premium
Outlet
by
Department
stores:
18
2
Online:
Online
market
is
expected
to
reach
48.5
billion
USD
this
year
and
65
billion
USD
by
2018.
-­‐ Double
digit
growth
of
mobile
portion
(Mobile
is
expected
to
account
for
60%
in
Online
by
2018)
-­‐ Customers
prefer
to
find
low
priced
goods
through
the
internet.
Basically
all
ages
tend
to
use
online
shopping
for
clothes
purchases
-­‐ Among
OECD
countries,
Seoul
is
the
most
densely
populated
capital,
meaning
that
the
sales
channels
can
be
focused
on
Seoul
at
least
in
the
entry
stage.
-­‐ The
rise
of
'Curation
service'
due
to
an
increase
of
interactive
communication
and
smart
phones
(recommend
desired
products
and
information
when
the
customers
want
it.)
-­‐ The
online
channel
has
been
changed
from
product
sales
approach
to
Contents
sales
approach.
From
the
lowest
price
products
to
professional
contents
to
the
customers.
4
High-­‐cost
low-­‐margin
structure
-­‐ Commission
to
the
department
stores:
average
37-­‐38%
-­‐ Excessive
discount
requirements
by
department
stores
caused
deterioration
of
profit
(decreased
up
to
30%
of
normal
rate)
and
brand
power
Indifferentiation of
MD
One
way
operation
-­‐ Indifferentiated MD
hurts
the
sales
and
brand.
-­‐ Forcing
‘the
brands
to
become
tenants
on
the
department
store’s
online
malls
increases
the
marketing
costs
of
the
brand
Home
shopping:
Fast
revenue
in
a
short
period
of
time
vs.
high
risk
of
stock.
-­‐ Average
commission
of
34%
or
more
-­‐ 2-­‐3
times
airing
and
stock
sales
on
online
mall
for
1
contract
-­‐ 40-­‐50%
of
customers’
product
return
after
delivery
at
the
supplier’s
cost
3

7. Market
segmentation
2015/11/12 ©
Finpro7
Clothing:
To
look
at
the
category
situation
in
the
recent
clothing
market,
the
portion
of
traditionally
strong
female
and
male
clothing
is
decreasing.
At
the
same
time
the
portion
of
the
casual
(including
SPA),
sports
(including
outdoor
and
golf)
and
chandlery
is
increasing.
1
Shoes
/
Bags
/
Watch
-­‐ The
shoes
market
accounts
for
the
third
largest
portion
of
the
entire
fashion
market
in
Korea.
-­‐ The
position
of
Finnish
brands
in
the
Korean
bags
market
:
If
the
brand
is
not
known
worldwide
,
it
is
very
difficult
to
overcome
the
leading
brands
in
Korea.
There
does
not
seem
to
be
any
brands
in
Finland
that
would
compare
with
for
example
Chanel
so
Finnish
brands
have
to
focus
on
young consumers
in
Korea.
-­‐ The
global
market
for
watches
is
12
billion
USD,
and
the
Korean
market
is
a
big
market
by
positioning
themselves
in
the
top
ten
worldwide
with
2.3
billion
USD.
2
Home
furnishing:
Korean
furniture
market
has
decreased
since
2008,
but
the
home
furnishing
market
is
set
to
double.
• IKEA
recently
arrived
in
Korea
and
is
targeting
the
home
furnishing
market,
not
the
furniture
market.
• The
home
furnishing
market
is
growing
due
to
younger
consumers
preferring
unique
new
individual
solutions,
different
from
elders
who
are
accustomed
to
standardization.
• Thus,
the
major
national
groups
like
Shinsegye,
Lotte or
E-­‐Land
engage
in
the
home
furnishing
market,
and
global
brands
such
as
H&M,
ZARA,
MUJI
or
A-­‐LAND
are
expanding
their
influence
to
the
home
furnishing
market
too.
3
SPA
Currently,
many
experts
predict
the
SPA
accounting
for
8%
portion
in
the
Korean
fashion
market
will
raise
its
portion
up
to
30%. The
brand
recording
the
highest
sales
among
the
fashion
brands
in
Korea
is
Uniqlo.
Zara
and
H&M
are
also
recording
high
sales.
Casual
(Street
fashion)
Outdoor
Kids
Young
consumer
groups
who
learned
the
fast
fashion
through
SPA
look
for
more
stylish
casual
fashion
and
brands.
The
street
fashion
market
grew
up
explosively.
Especially,
young
people
drastically
investing
in
themselves
developed
the
casual
(street)
fashion
as
the
hottest
category
in
the
Korean
fashion
market
based
on
a
high
consumption
power
with
the
increase
in
the
single
household.
The
Korean
outdoor
market
is
worth
6
trillion
won
which
is
the
2nd
biggest market
in
the
world.
Although
it
recorded
an
explosive
growth
more
than
500%
compared
to
5
years
ago,
the
growth
is
slowing
down
recently.
However,
it
is
still
an
attractive
category
in
Korea,
recording double
digit
growth.
Especially
while
domestic
brands
are
undergoing
an
intense
competition
and
the
declining
growth
rate,
overseas
premium
outdoor
brands
are
steadily
expanding
the
market
growth.
In
South
Korea
in
which
birthrate
is
the
lowest
among
OECD
members,
the
children's
wear
market
is
in
recession
with
the
increase of
the
single
household.
The
sales
of
brands
pursuing
the
children's
wear
style
of
Northern
Europe
are
rising
alone.
Actually,
to
look
at
the
internet
search
keyword
status
related
to
the
Nordic,
its
search
quantity
is
the
biggest
next
to
the
interior.

8. Conclusion
and
Recommendation
2015/11/12 ©
Finpro8
It
might
be
hard
and
costly
to
start
by
entering
into
an
Offline
Distribution
channel
without
a
large
amount
of
capital
or
support
of
large
companies.
Therefore,
gaining
traction
in
the
Korean
market
through
online
channels
is
cost-­‐effective
and
for
the
offline
channels
are
advised
to
enter
through
choosing
a
select
shop
partner.
There
is
no
reason
to
start
by
setting
up
offline
stores
anywhere
else
than
Seoul.
The
population
density
in
the
metropolitan
are
of
Seoul
is
the
highest
among
the
OECD
countries.
1 Enter
through
the
online
channel
+
enter
in
to
aoffline
select
shop
South
Korea
is
one
of
countries
that
has
the
highest
internet
penetration
rate
and
mobile
shopping
utility
rate,
especially
interesting
is
the
overseas
direct
purchase
market
of
annually
10
billion
dollars.
Koreans
are
used
to
purchasing
foreign
brands
and
items
directly
from
overseas
online
shops,
this
characteristic
can
help
brands
conduct
some
product
testing
with
consumers
.
Things
to
consider
when
doing
this
is
what
kind
of
items
is going
to
be
sold
and
how
do
import
regulations
affect
it.
Also
the
company
will
need
a
Korean
website
and
might
want
to
choose
the
partner
in
Korea
(online
marketing
agency)
and
establish
a
strategy
for
the
brand
promotion
and
sales
activation.
2 If
you
have
an
item
for
direct-­‐purchase,
operate
a
Korean
language
page
in
the
headquarter
in
Finland,
and
utilize
an
online
marketing
agency.
In
the
past,
the
promotional
channels
that
could
reach
customers
existed
only
in
the
mass
media
like
TV,
radio,
and
newspapers,
and
the
channels
for
companies
to
deliver
the
product
information
to
the
public
were
limited.
However,
the
channels
with
witch
to
reach
customers
increased
with
the
internet/mobile
dissemination
and
the
method
that
companies
provided
customers
with
the
product
information
unilaterally
turned
to
a
method
that
customers
find
the
company
information
and
products
if
necessary.
That
is,
while
firms
could
not
record
high
sales
if
they
could
not
reach
the
public
through
the
mass
media
in
the
past,
at
present,
they
can
satisfy
only
a
few
customers
(maniac)
by
a
few
channels
and
can
spread
to
the
public
(mass)
through
the
viral
marketing
and
online
channel.
Good branding
is
letting
customers
spread
the
word
of
the
good
product
through
the
new
existing
channels,
Korean
consumers
are
the
most
connected
people
in
the
world
so
this
amplifies
the
effect
and
makes
it
even
more
important
to
utilize
a
strong
online
strategy.
3 Concentrate
marketing
efforts
on
specific
targets

9. Contact
us!
• Read
more,
contact
us
and
download
full
report:
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2015/11/1
2
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