Korea’s total fashion market, including shoes and sundries, grew 8.3% year-on-year to about US$29 billion (32.7 trillion won) in 2011.

The fashion market recorded strong growth in the first half of 2011 in line with the domestic economic recovery, while also dealing with the aftereffects of the global financial crisis.

In the second half of the year, when economic uncertainty increased, consumer sentiment
contracted remarkably, leading to a significant slowdown in growth.

The apparel market in 2012 is expected to expand 2.5%, in line with the level of private consumption growth shown in various projection indicators, to about US$29.7 Billion (33.5 trillion won) .

Similarly timed to overall economic growth, the apparel market is likely to post stronger growth in the second half after bottoming out in the first half.

Entry into Retrenchment Management

Most fashion companies are establishing management strategies with a focus on stability,

including disposal of inefficient outlets and enhancement of profitability, in order to strengthen the efficiency of management rather than expanding corporate scale through new businesses. Regarding brand management, 26% and 34% of surveyed companies responded that they would work to establish their image and reinforce the competitiveness of product designs, respectively, in lieu of expanding distribution networks.

Asked if they felt a need to expand fashion
businesses, 38% of respondents said that they will push to advance their brands into overseas markets, including China, and expand their business, followed by those intending to launch sports brands (25%) and advance into the retail sector (9%).
 

Sports & Outdoor Wear Still Strong

Outdoor wear is expected to record steady growth in 2012, continuing the trend of last year, as the segment receives more attention than any other type of clothing. Since 2001, outdoor wear has maintained a high growth rate of over 20% on annual average, and with the recent
brisk performance of lifestyle outdoor wear, the market shares of outdoor brands launched in the past few years are expanding sharply.

As outdoor wear also is expanding its business scope to the fields of cycling, travel and water sports, its growth is projected to continue well into the future. With consumer lifestyles changing, in particular, it appears that trends of grafting outdoor styles to other types of clothing like women’s suits, women’s casual wear, etc. are likely to prevail.

Global SPA ‘Hot Wind’ May Continue in 2012

Global SPA brands’ encroachment on the young casual customer segment will deepen further, so young casuals with relatively weak competitiveness are feared to suffer a blow. Particularly due to increasing numbers of large-scale shopping malls, such as Gimpo Lotte Mall and Yeondeungpo D-Cube City, which opened recently, and large-scale shopping malls like Yeoido IFC Center, which is set to open this year, the expansion of distribution networks by global SPA brands like Zara, H&M, etc. is expected to continue.

As global SPA brands, including Topshop, are known to be considering an advance into the Korean market, global SPA brands are expected to continue to expand their businesses for the time being.

Distribution Paradigm is Changing

Pointing to complex shopping malls as a future new growth engine, large distribution firms are concentrating on the development of business at complex shopping malls of late. Their intention is to pursue ultra-large complex shopping centers composed of department store,
large mart, shopping mall, cinema, sports and leisure facilities in major cities nationwide.

Since leading department stores are promoting the development of complex shopping centers, including Lotte Mall and Gimpo Airport Sky Park, which opened in December last year, the number is expected to increase to about 10 by 2015.