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| Shinsegae Simon's Yeoju Premium Outlets |
A little past 10 a.m. on a weekday, customers started to flow into the Yeoju Premium Outlets on the southeastern outskirts of Seoul. While the 264,400 square meter site lined with luxury brands remained relatively quiet in the morning hours, there was a noticeably large flock of Taiwanese tourists and groups of middle-aged women strolling around in suglasses and high heels.
The customers browsed around stores of designer clothing, fine leather items and housewares, and emerged from them with shopping bags in their hands. By lunchtime, the number of customers had visibly increased and continued to stream in. Shoppers leisurely enjoyed lunch at the restaurants and food court in the outlet.
As the nation’s first suburban premium outlet centered on high-end brands, Yeoju seems to have a fixed customer base. Other than foreign tourists, stylish middle-aged women seem to be major spenders there.
“Unlike most outlets where people casually come in flip flops, Yeoju Premium Outlets has a lot of customers that come dressed up. Since it’s a premium outlet focusing on luxury brands, loyal customers are those who not only come to seek high-end products at reasonable prices, but also who take the time to enjoy the shopping experience,” said Anna Jun, assistant manager of the PR team.
In response to shoppers’ demand, employees at the outlet provide the same quality service as that at downtown department stores, she said. Customers would naturally be attracted to outlets that provide slashed prices in addition to superior customer service, she added.
“Once people experience purchasing a quality product at a heavily discounted price, they keep coming back. They tend to stop going to department stores where they pay full price for products,” Jun said.
A day at Yeoju Premium Outlets seems to provide a stress-free shopping experience, away from the hustle and bustle of downtown department stores, yet providing access to top-notch products at reduced prices, along with quality customer service.
Shinsegae Simon’s premium outlets
Yeoju Premium Outlets is operated by Shinsegae Simon, a 50-50 joint venture between Korean retail giant Shinsegae and the U.S.-based Simon Property Group. The latter, which is the largest commercial real estate company in the U.S., operates five retail real estate platforms, including its Premium Outlet Centers. The Premium Outlet Centers span across the U.S., Canada, Mexico, Japan, Korea and Malaysia. There are currently two such outlets in Korea, and another will open in August.
Yeoju, which opened in 2007, was the first premium outlet here. It was followed by the Paju outlet, northwest of Seoul, in 2011. The former has 145 mostly foreign luxury brands, while the latter has 220, featuring a greater variety of outdoor brands.
Growing industry
In 2012, some 217,000 foreigners visited the Yeoju outlet, a sharp rise from 120,000 in 2010 and 55,000 in 2008. Shinsegae Simon projected earlier this year that more than 250,000 foreign tourists will visit the outlet in 2013.
As the nation’s first of its kind, Yeoju Premium Outlets has fostered an outlet shopping culture here. Since Shinsegae Simon’s Yeoju Premium Outlet opened, domestic retailers have followed suit in setting up outlets on the outskirts of cities across the nation. With the number of outlets growing, more consumers are opting to shop there rather than at downtown department stores. This is due not only to the outlets’ year-round discounts but also to the quiet, spacious and refreshing suburban shopping environment. Despite the outlets being located around an hour’s drive from cities, increasingly more families have begun to turn to them as weekend destinations because of the leisure facilities at the outlets themselves and the neighboring tourist attractions.
Retailers are actively expanding to the outlet business to meet the growing demand. Retail giant Lotte operates eight outlets, two of which are large-scale outlets in suburban areas. It plans to open two more in the second half of this year. Meanwhile, Hyundai is set to open its first outlet in 2014 and is considering opening a second one in the coming years.
While outlets have been mainstream retailers for some time in countries such as the U.S. or Japan, they have just emerged as major shopping centers here. But despite its short presence, outlet business’ sales are growing at a rapid rate. According to the retail industry, local outlets saw double-digit increases in sales last year from 2011. The outlet market is estimated to reach 4 trillion won by 2017. Shinsegae Simon forecasts that its outlets will generate 800 billion won in sales this year. “With the outlet industry being a relatively new one here, there is much room for growth,” said Jun.
Expansion mode
Boosted by its fair performance, Shinsegae Simon has laid out plans to expand its presence across the nation. It is planning to double the size of its Yeoju outlet by 2014. In November 2011, Simon Property Group, Gyeonggi Province and Yeoju County signed a memorandum of understanding (MOU) regarding investment for expanding the Yeoju outlet. According to the MOU, Shinsegae Simon will invest $67 million (75.7 billion won) to expand the current 264,400 square meters to 462,700 square meters. The stores will also increase from the current 145 to around 250.
In addition, Shinsegae Simon’s third outlet is set to open in the southern port city of Busan in August this year. Shinsegae Simon expects to draw 6 million visitors annually from the city and adjacent areas. It is also reviewing plans to open a fourth outlet in the central city of Daejeon. In the long-term, it aims to have a presence in every major provincial city.
Pursuing mutual growth
“The opening of an outlet this size creates some 1,200 jobs, so it is bound to benefit local residents,” Jun said. According to Shinsegae Simon, 88 percent of its 1,250 employees at its Yeoju outlet and 80 percent of those at its Paju branch are local residents. Moreover, it claims that the steady stream of visitors to the new outlet will also help local tourism businesses and communities.
The two operating outlets currently have stores selling regional specialties. “When people come to the Yeoju outlet, they tend to buy a sack or two of Icheon rice,” she said, referring to the nation’s best quality rice produced in the neighboring city of Icheon. “We expect the same for the outlet in Busan; we believe it will help increase the sales of local specialties such as anchovies and seaweed.”
According to a report compiled by the Korean Regional Development Association in November 2009, 84 percent of the visitors to the Yeoju outlet dined at restaurants located within Yeoju and 45 percent visited tourist attractions there. Studies have shown that sales of the food service industry in the area have risen accordingly. In addition, wholesale and retail trade firms as well as those working in the sector increased since the opening of the outlet in 2007. The yearly economic effect of a single outlet is estimated to amount to 584.6 billion won and entail the employment of some 10,000.
“Shinsegae Simon is committed to mutual growth with local communities,” said Jun.
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