PAJU, Gyeonggi Province ― Shinsegae Simon plans to increase the number of its suburban outlets to eight by 2020 including the existing two in Paju and Yeoju, and the one scheduled to open near Busan in September.
“We plan to open our fourth premium outlet in Daejeon and the fifth one in the southwestern outskirts of Seoul,” Shinsegae Simon chief executive Kang Myung-koo said in a press conference Thursday.
“We will review various locations around the other metropolises (Gwangju, Daegu, Ulsan and Incheon) for the remaining three.”
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Shinsegae outlet in Paju |
The 50:50 joint venture between Shinsegae and U.S. commercial real estate company Simon Property Group forecasts the size of Korea’s premium suburban outlet market will triple over the next five years to some 4.1 trillion won ($3.6 billion) by 2017.
“It has been 14 years since Japan opened its first suburban outlet, and now it has 20. We believe the demand in Korea will continue to grow,” Kang said.
Shinsegae Simon opened an expanded version of its Paju outlet to VIP customers on Thursday, a day ahead of its official opening.
The revamped outlet in northwestern Gyeonggi Province now has 220 brands, up from 165, and its floor space has been enlarged 30 percent to 40,182 square meters.
The revamp comes just two years after the Shinsegae outlet opened in March 2011, only to be beaten in sales by a larger Lotte outlet which opened nine months later, just 5 kilometers away.
The Lotte outlet in Paju was on a roll from the beginning thanks to having the nation’s first Prada outlet and a wider range of mid-priced brands. It soon surpassed Shinsegae’s Yeoju outlet in revenue, taking the No. 1 spot in the premium outlet market.
“We started as a premium outlet, and will continue to focus on high-end brands. Our Yeoju outlet will expand next year by adding over 100 new brands,” Kang said.
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Shinsegae Simon CEO Kang Myung-koo |
“Lotte, on the other hand, appears to have a different concept as it concentrates more on quantitative growth than keeping a premium image. They sell lots of special-offer products in stacks outside the stores.”
The two archrivals’ outlets in Paju have 90 overlapping brands, and in 80 percent of them, Shinsegae beat Lotte in sales, Kang said, adding that Shinsegae’s revenue rose over its target despite the competition.
Shinsegae Simon does not disclose sales figures under a contract with the NYSE-listed Simon, but it targets sales of more than 800 billion won this year.
“With an exotic shopping environment and premium brand-focused lineup, our Busan outlet is expected to attract consumers from Haeundae (an affluent district in Busan), Ulsan, which shows the highest income per person in Korea, and Pohang (North Gyeongsang Province),” the CEO said.
The number of shoppers to suburban outlets has been showing two-digit growth every year.
Some 5.5 million shoppers including 217,000 foreign tourists visited the Yeoju outlet last year, up from 2.5 million in 2008. The number of visitors to its Paju outlet stood at 5 million last year.
Over three-quarters of the shoppers at Shinsegae outlets are parents in their 30s and 40s.
Of the new brands added to the Paju outlet, 16 including the North Face are opening their first outlet stores in Korea.
Simon Property Group runs 63 outlets in the U.S. and 14 more through joint ventures with its partners in Japan, Korea, Mexico and Puerto Rico.
By Kim So-hyun (
sophie@heraldcorp.com)
