Tapping Into The South Korean Fashion Industry

June 28, 2018

Kexin

Asian and Western cultures are two worlds apart, and we do not just mean geographically. Each regional market has a distinctive style of their own. However, one particular Asian country that is synonymous for their quirky and notable fashion scene is none other than South Korea.

Source: South China Morning Post

The South Korean fashion retail scene has been booming, thanks to strong influence of the omnipresent K-POP culture in the country. Also known as the “K-Wave”, this ubiquitous phenomena stemmed from the popularity of social media and local celebrities, leading to adoption by consumers. Easily the most fashionable country in Asia, the local Korean fashion market is at an estimated 44.32 billion won as of 2018. With such colossal numbers, this could possibly open doors for opportunities and market growth for international brands. However, tapping into the Korean fashion industry is much easier said than done.

The current Korean fast fashion scene is at an unbeatable pace. The lightning speed at which Koreans are able to manifest a clothing idea into something tangible puts foreign brands at risk. How can international brands divert the market attention and patronage towards Korean retailers on themselves?

Understanding The Market

It all boils down to understanding the market demand. Local retailers have more leverage in this case since their headquarters and production warehouses are most likely situated domestically, with real-time exposure of garments that are making waves in the local fashion scene.

As mentioned earlier, the robust K-POP culture and celebrities are crucial elements to keep an eye on as they pave the way for how locals consumers dress.

“There are lots of local online stores reflecting Koreans’ taste for better than international brands,” shared the senior fashion editor of Vogue Korea, Borah Song.

International brands are simply not rapid enough at picking up erratic fashion trends in Korea, which could be the reason behind American fast fashion brand, Forever 21’s feeble market share in Korea in 2016.

Source: The Korea Bizwire

Take Korea’s favourite winter jacket as an example of fleeting local trends. While Western countries favoured sleek and minimalist coats during winter, the Koreans preferred otherwise. During winter of 2017, long puffy jackets were all the rage in Korea, as K-POP stars were spotted donning the “caterpillar jacket”, creating demands among local youths who were eager to emulate their favourite star styles while keeping warm.

Analysing Korea’s Retail Demands With Data

The hindering factor of geographical difference should be a thing of the past in this era of technology and the internet. International brands wishing to tap into the lucrative Korean market should keep a watchful eye and monitor the assortment performance from local retailers and brands. They say imitation is the greatest form of flattery so what better way to mimic the thriving local market by utilising data to your advantage.

Here, we analysed data from two Korean retailers, Aland and Nain to decipher the current local fashion market. An American retailer, Urban Outfitters, will also be used as a point of comparison for certain styles and categories.  

Aland and Nain Performance Strategy

 

Replenishment rates for both retailers were slightly lower than the sellout rates, which could indicate a healthy supply of stock for their assortments. However, the difference in sellout rates for both retailers could be due to their jarring SKU count difference. For the retailer Aland, the high amount of discounted items paired with an almost non-existent discount range meant that their sales were all organic and not discount driven. However, the small percentage of discounted items paired with a more generous discount range for Nain indicated that they were clearing up older items in their inventory, a common strategy used by retailers.

Aland bestseller sellout rates

 

The chart above depicts the top-selling categories from Aland. The high SKU count for tops were unfortunately met with the lowest sellout rate among all six categories, which could mean that the retailer was overstocking on tops, causing oversaturation for this category. Two star categories, however, were skirts and bags. Both categories displayed impressive sellout rates despite lower SKU counts.

Nain bestsellers sellout rate

 

Nain, however, bore slightly different results from Aland. Categories that did well were bags and shoes. The tops category from Nain shared similar patterns with Aland: high SKU counts met with below average sellout rates.   

Nain Bestselling Bags Category

From left to right (all from Nain): Ring Handle Cross Body, Square Velvet Bag, Belt Strap Square Bag

With bags being the recurring category for both retailers, we browsed through the assortment to monitor the similarities among the bestsellers. For Nain, consumers favoured medium-sized shoulder bags with a single metal detailing on the exterior.

Aland Bestselling Bags Totes

From left to right (all from Aland): 3.3 Field Trip, Duck Bag, WL Market Bag

The best-selling bags from Nain, however, took a more casual route. Their consumers were big fans of canvas tote bags, emulating a more casual and “normcore” style.

Aland Bestselling Skirts Check Print

From left to right (all from Aland): Check Pencil Skirt, R Multi Check Skirt, Check Midi Skirt

The skirts category was also another best-selling category for Aland. According to the selection of skirts that were of high demand, check prints with more demure hemlines and looser silhouettes were popular among Koreans, in contrast to the best-selling skirts from the American market under the retailer Urban Outfitters, as shown below.

Urban Outfitters Bestselling Skirts

From left to right (all from Urban Outfitters): BDG Super High Rise Midi Skirt, I.AM.GIA Valkyrie Zipper Skirt, BDG Acid Wash Pencil Mini Skirt

Nain Bestselling Shoes Heeled Boots

From left to right (all from Nain): Front Row Suede Ankle, Bowknot Suede Ankle, Marian Square Ankle

As for the other Korean retailer, Nain, the shoes category outshined the rest, with suede heeled boots being a fan favourite due to their excellent performance. This also contrasted the best-selling shoes from Urban Outfitters with sneakers experiencing rampant stockout and replenishment rates, indicating a preference for urban styles when it came to footwear in the American market.

Urban Outfitters Bestselling Sneakers

From left to right (all from Urban Outfitters): Vans X A Tribe Called Quest SK8-Hi Sneakers, Fila Disruptor II Sneakers, Pro Keds Royal Lo Sneakers

Culture Shock?

Aland VS Urban Outfitters swimwear and beachwear performance comparison

 

Another factor to take into consideration when planning your assortment would be cultural differences, which could determine the performance of a particular clothing category. Here we see a vast performance difference from two different retailers. In most Asian countries, especially Korea, porcelain white complexion is extremely sought after, shying away from any activities that could possibly lead to tanning. This fixation highly contrasts the American culture of tanning, hence the anticipation of summer. While extensive swimwear and beachwear collections prosper in the American market, it may be met with profit losses in the Korean market, as the table above suggests.

All in all?

Adaptation is the key to survival for most situations, and this method can be similarly applied to fashion retailers and brands. To adapt is to analyse similarities and norms of a specific environment and mimic it, which can be done with the guidance of retail data. With coherent understanding of a specific market, a customised assortment strategy can be mapped to ensure that it caters to the taste of local consumers. With that, world domination in the fashion industry seems almost viable.

Interested to find out about the Korean fashion industry? Drop us an email at info@omnilytics.co and we’ll be in touch!

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The data above was obtained from Omnilytics, real-time market data platform. The numbers and statistics may vary, as the platform is updated every day. The time period of the information taken was between 1st October 2017 to 31st May 2018.