Korean Fashion company, leaving department store and heading for Online mall

The fashion industry has begun to reorganize its distribution network.

As more and more consumers who focus on cost-effective products are increasing, middle-priced brands that are less competitive in price are pulled out from department store, and some high-priced brands are also trying to reduce costs by launching it online mall.

In the past, department stores were the absolute distribution network that attracts customers. However, as the SPA brand gains popularity and younger people do not seek department stores, fashion companies are also making changes.

The fashion company LF withdrew about 40 mid-size brands “Jill by Jill stuart”, “IL CORSO” from department store last year. When it comes to consider department store commission, it did not make any profit. Since then, the price has been lowered and sold only online.

A LF official said, “”Both brands have decided to sell online because it is difficult to make profits by selling them at department stores. However, Jill Stuart, Hazzys, Lafuma and other high-end brands will continue to focus on department stores. The official said, “”It means that we are going to makes the best use of distribution network to suit the personality and efficiently operate the brands.

Samsung C & T’s fashion division has been concentrating on expanding its online sales since last year. High-end brands such as Le Beige, Tom Brown, and 10 Corso Como opened in the integrated online malls.

Especially, Le Beige became so popular that online sales accounted for 20% of total sales on the first day.

As the number of consumers in the 50’s and 60’s who are accustomed to the Internet and the mobile environment is increasing, high-end senior brands are also selling well online. 10 Corso Como eco bags achieved a sales rate of over 20 times compared to the previous year.

FILA Golf also announced the withdrawal of the department store. FILA Golf has decided to change its distribution channel to wholesale such as golf course club houses from next spring and summer season. In the past two years, more than ten brands of golf apparel have been released, and competition has intensified to improve profitability by streamlining the cost of distribution.

The company plans to invest in expanding golf apparel and golf shoes lineup by closing 20 department stores in August and plans to be specialized for the golf only.

According to SK Securities, LF’s online sales portion grew to 20percent last year from 16 percent in 2015. Samsung C & T’s fashion division also grew to 10 percent last year from 5 percent in the first year after launching its integrated mall SSF in 2015.

Ref. Naver, Jun.17,2017

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