Textination Newsline

• Korean sportswear market with above-average growth
• International companies expand / Brand awareness boosts consumption

Seoul (GTAI) - While consumption in Korea (Rep.) is generally weak, some segments show relatively high growth rates. Sales of sportswear have risen steadily over the past few years and are likely to rise in the future. Great sport events and the enthusiasm of the Koreans for prestige items are driving the segment, of which international companies benefit also. The market for outdoor clothing, on the other hand, has already reached its peak.

The sportswear market in Korea (Rep.) is developing dynamically. According to estimates by the market research institute Samsung Design Net, the segment premium sportswear reached a growth of Won 4.8% to 6.6 billion in 2016, (circa EUR 5.1 billion, 1 EURO = roughly 1.284 Won, - in the yearly average of 2016). As a result of this positive development, more and more international companies are pushing on the Korean market, thereby expanding the range of goods available for local customers. So far, a large proportion of orders has been sold via large international shopping portals. In the future, the local presence will gain in importance.

International companies are pushing on the market

The American manufacturer Under Armour started direct sales in 2017 with its first own store in Korea (Rep.). In January, after Dependance in Shanghai the company opened its worldwide second largest store in the nobel part Gangnam in Seoul. So far Under Armor had operated its sales mainly through smaller stores in partnership with a Korean retailer. For this reason four additional flagship stores as well as numerous shop-in-shops are to be implemented in during the year of 2017.

But other sector companies are also attracted by the Korean market, such as Lululemon Athletica, a Canadian company specializing in apparel for yoga. Lululemon has opened its first Asian branch in Seoul in 2016. Meanwhile a second store has been opened in Seoul, a third store is to follow later in the year 2017.    

German companies are well positioned

The German company Adidas also was able to generate very good results in the past on the Korean market. Despite a sluggish economy and weak consumption, the company turnover in Korea (Rep.) rose by around 15% in 2016. According to media reports, Adidas predicts a sales upturn of around 10% for 2017.

According to Eddie Nixon, CEO of Adidas Korea in the daily newspaper "Korea Times", the growth in 2016 was reached due to a high demand among young consumers, children and streetwear. The turnover of Adidas in 2016 reached around Won 1 billion in nearly 800 shops around the country. Most of them are managed on a franchise basis. For the Korean market therefore can be said, the population is more active and fitnessoriented than in other Asian countries.

Puma, on the other side, concentrates in Korea (Rep.) in addition to football articles mainly on its female clientele, which accounts for about 55% of its sales. According to Puma CEO Rasmus Holm in the "Korea Herald", this percentage is expected to rise even further as the market for sportswear is increasingly fashion-conscious. Also the influence of the entertainment sector on the segment is becoming increasingly apparent, which is why Puma is cooperating with K-Pop stars in the marketing sector.

According to Holm, the sportswear market in Korea (Rep.) is in a good growth phase. In the short run Puma will primarily focus on optimizing its existing shops. In future, an expansion of the business will be envisaged also, although no figures or timetables have been mentioned. However, the Korean market is not easy. The environment and competition are highly competitive. In addition to numerous international sector companies, local competitors are also well positioned.

"Korean Wave" as a location factor

Representatives of companies also refer to the appeal effect of Korea (Rep.) itself on other Asian countries in a consequence of the so-called "Hallyhu" - the "Korean Wave" of TV series, music and fashion. Numerous consumers in the region orientate themselves on developments in Korea (Rep.); the country is regarded as an international trendsetter in the cultural segment. Fashion and brands that are successful here often spread with a short time delay throughout Asia.

A very positive effect on the local sporting goods and clothing market, Korea (Rep.) will get through the two major sports events of global importance which will happen within ten months. In May and June 2017, the FIFA U20 World Cup will take place in six cities in the country, including a participation of the German team. Manufacturers can present their products to a global audience as well as at the Olympic
winter games, which will be held in Pyeongchang from February 9th to 25th 2018.

Boom at outdoor clothing fizzles

The KOFOTI (Korea Federation of Textile Industries) is more critical about the sector's prospects and forecasts a declining sales trend for 2017. However, this is partly due to the fact that the Korean market for outdoor clothing has shown a declining rate following a boom in the beginning of the decade. Until 2014 the sales of outdoor clothing reached double-digit growth rates partly of more than 30%.

The market was driven by a growing sense of leisure and a great passion of the Korean people for hiking. Between 2005 and 2012, the number of sector enterprises jumped from 30 brands to around 170. However the growth rates have declined gradually since 2012 and the market is estimated to have stagnated at a volume of Won 7.4 billion in 2015, some sector companies have already suffered high sales losses in a double-digit range.

For 2016, there are still no concrete figures for the overall market, but different indicators point to declining sales. So the import of footwear fell by 41.5% in 2016, imports of clothing made out of felt, fleece and PVC went down by 21.7%, anoraks and wind jackets for men declined by 5.4%. According to media reports a number of companies are already withdrawing from this segment due to market saturation. Others are orienting towards expanding areas such as fitness, running sports accessories as well as for yoga and golf wear.