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Showing posts with label distribution. Show all posts
Showing posts with label distribution. Show all posts

Thursday, December 4, 2025

Business as usual

As usual in Seoul, real estate and urbanism are never far from the headlines, but let's skip topical stuff and limit to mere footnotes recent controversies (this Seoul city erection in front of Jongmyo*? that measure from the national government**?).

Let's talk shop. 

You see in with those 'for rent' signs, you measure it with the speed at which new stores tend to close: small businesses are really feeling the pinch***. Part of it is conjunctural - the Korean economy as a whole is struggling, and demographics don't bode well for the future. Part of it is structural - more than COVID, the labor reforms that preceded changed fundamentally the street experience for Seoulites: used to a city that never slept, they're now coping with last orders at 9 pm or restaurants closing for dinner altogether.

And of course, more and more Koreans are now ordering everything online. Not just these GenZ who don't cook and limit their IRL shopping experiences to retailtainment or browsing Seongsu-dong's pop-up streets like their parents did with fashion magazines. Yes, Seoul's last mile equation is not sustainable (and as much as I appreciate last minute, early morning, ultra fresh deliveries, I'm glad their social costs are being investigated), but the trend is global, and all cities have to adapt.

It's harder to adapt when the urban hardware is obsolete. 

You're less inclined to contribute to your neighborhood's vitality when 'proximity' shops and services are not so close and in Seoul, apartment blocks tend to cut citizens from their city.

In the old gen 'apateu' blocks, a building devoted to businesses was generally included near the main entrance, sometimes in secondary entrances. This 'open ring' was seldom complete, but everybody walked or drove by these shops every day, particularly since few parking spaces were underground. These businesses belonged to the community.


Some housing complexes are more blended with their surroundings, their edges consisting of mixed use buildings. Even if there's less often greenery to compensate****, pedestrians enjoy (functionally speaking) a better street experience from the outside (urban continuity, diversity...). On the other hand, the inside may seem more exclusive. 
By nature mixed use buildings, officetels usually include shops and services. But when those take too big a share residents can easily feel overwhelmed. Many exclusive, high rise projects with only a couple of buildings have a mall on the lower floors, a 'vertical buffer' that's de facto a separate building with a devoted parking to preserve the residents' quality of life. But then, since it takes anyway 10 mn to leave your luxurious apartment and reach an entrance that's far from everything, many prefer to take their car and shop elsewhere, and this vertical city can turn into a tale of two cities. 

Another tricky model is what I call the 'captive cluster'; very common in greenfield 'new towns' across the capital region and around major cities. In the middle (in best cases) or at the edge (too often) of a group of apateu blocks that can involve different developer brands, urban planners insert a low rise block of mixed use buildings with all the shops and services on the ground floor. Some can be relatively well done, making the best of what's left of a natural landscape (e.g. waterways), and you can almost enjoy a village atmosphere that changes from the dull tombstone collections around, particularly since each lot owner build their own. But too often these clusters fail because there are not enough candidates to open shop*****, or because they've been poorly designed. 

Instead of an open grid, some of these clusters (particularly recent ones) propose only one or two car entrances and force visitors into a full round along a conveyor belt before exiting. On purpose, like a journey in an Ikea store makes you browse the whole catalogue. Except people move by car because these new towns are humongous, and the streets and parking spaces are seldom as entertaining, well drawn, and planned. Sometimes, these clusters are even split into two independent halves that don't communicate directly. And this 'captiveness' is actually a sales argument to recruit new businesses... Needless to say, not very sustainable.

 

If Seoul's 'MOA Town' concept signaled an evolution from massive tabula rasa to partial redevelopment, allowing more diverse cityscapes and ecosystems (see "From Human Town to Gather Town"), the market remains dominated by big projects, New Towns that obliterate real cities. 

It's not its big blocks but its remaining villages that make Seoul special. If we neuter them, if we destroy diversity, city centers will die. If we do nothing they'll die out, even if a few local markets miraculously manage to thrive and warm up whole neighborhoods.

I've been advocating pragmatic approaches to revive decaying city centers. They all involve bringing back inhabitants, even if that means designing exceptions to the rules, for example by allowing mixed uses in low rise business areas, or small scale revamps that involve shared facilities or obligations (e.g. elevators, parking spaces). Some may be implemented, stay tuned.


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* ICYMI Seoul city decided to replace Sewoon Sangga with a park between Jongmyo and Namsan, but also to 'compensate' by allowing much taller buildings in the vicinity, which of course doesn't fit preservation or UNESCO Heritage guidelines:

 

Adieu #SewoonSangga. #Seoul to replace #KimSwoogeun landmark with a park between #Jongmyo & #Namsan. But bdg heights raised to 71.9m on #Jongro (+16.9) & 141.9m on #Cheonggyecheon (+43.2). Will #UNESCO accept? #세운상가 #urbanism (20251104 SeoulVillage on X)

** ICYMI the government extended Seoul's speculative zone from the 3 usual districts (Gangnam, Songpa, Seocho) to the whole city, which resulted in a freeze in transactions (except in the 3 districts that became relatively more attractive), and a hike in rental costs. Like previous reforms, the aim seems to be crushing further the middle class and making first purchases impossible (the guy in charge of the reforms was driven by his idea that first time homeowners tended to vote more conservative)....

*** Big players are not spared, but if HomePlus will yet again change hands (Carrefour, HomeEver, Tesco... WhatEver?), its financial trouble have a lot to do with MBK Partners' disastrous management.

**** Wangsimni New Town's Majang-ro 19-gil sets a better example with dense trees on both sides,  

***** yes, these new towns also include new schools, so it's not just dwellings that are in oversupply nationwide
 

Wednesday, August 10, 2016

What's cooking, Korea?

In a recent focus on the decline of home made banchan in Korea*, Korea Joongang Daily mentioned busy schedules, and the boom in HMR (Home Made Replacement) products, new online services (e.g. The Banchan, about to be purchased by food major Dongwon Group), or restaurants proposing home food (jipbap).
Korea's tradition of homemade banchan is vaning. Many new products and services indeed (20160810 - twitter.com/theseoulvillage/status/763151485890809856)
To me, even more than the arrival of hypermarkets, the emergence of SSM or Super-SuperMarket  (dominated by the same oligopoly: Lotte Super, HomePlus Express, E-mart everyday) accelerated changes in HMR variety and packaging, particularly when it comes to targeting specific demographics, like single households. And as all the major producers seeked for differenciation, the HMR offer evolved from classic dishes to more creative recipes. 

Yet that creativity has yet to emerge for banchan in the Korean distribution, even online.
If theBanchan is more a food market before than a banchan specialist, it does offer a wide range of banchan, but without revisiting the classics. Furthermore, big food groups taking over this kind of potentially disruptive players doesn't bode well for diversity in the future.
I'm less worried about fewer Koreans preparing their own banchan - a logical trend - than about Korean palates being exposed to fewer kinds of banchan. And over the past few years, the decline in diversity for side dishes offered in Korea's mom and pop restaurants has been very spectacular. If it's linked to their struggle to stay in business in these times of crisis, old customer habits don't help: many remain reluctant to pay a fair price for Korean food (yet ready to pay way too much for mediocre Foreign food). 

The good news is that Korea, as usual experiencing societal changes at bballi bballi speed, seems to be rediscovering cooking way sooner than other nations. And not just young girls asking family recipes from their halmoni: people of all ages opening creative eateries, granddads venturing into the kitchen, food becoming a key driver in the startup ecosystem...

So be not afraid, Korea, and keep surprising us!

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* "Rise of pre-made banchan may herald end of an era: Busy schedules deal blow to culture of Korea’s quintessential side dishes" (KJD 20160810)

Tuesday, July 3, 2012

Ghost in a sale (How many holograms of alcohol in your beer?)

I met another ghost, the other day, in Eunpyeong-gu. The ghost of a clone of some surgically enhanced celeb, promoting a beer brand in the beverage section of an hypermarket:



I couldn't help but think of that flickering Geisha on Blade Runner's electronic ads (giant blimps and billboards).

This here ghost may well look more alive than the original celeb. Still too artificial to be confused with a genuine "replicant".  

To beer or not to be? How many holograms of alcohol in your beer? Do Androids dream of electric sips?

Seoul Village 2012
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Friday, April 27, 2012

500 m, 80%, 100% urban crappuccino

Two figures have been playing in my head lately: 500 m and 80%.

500 m? A new law shall fix a minimum radius of 500 meters between two shops belonging to the same franchise. In other words: when a - say - Caffe Bene pops up in your neighborhood, another one will not open next door just weeks later. In yet other words: franchisors have to stop giving away as many rights as they fancy, to the risk of spoiling franchisees, who paid fortunes in rights and marketing fees.

80%? Eighty percent of new very small businesses fail in Seoul. An unsustainable rate which often strikes first timers / old timers who invested their last assets to give a chance to their kids, for instance in - say - a coffee franchise.

This coffee bubble was bound to pop (see for instance "Brews and bruises", one year ago), but since whole residential neighborhoods have been transformed into urban crappuccino, the commercial real estate mess could reach much further.

Many started "alibi businesses" just to get official approvals, turning parts of their homes into (presumably more valuable) commercial properties. From the start they didn't expect to make a big bang for their small buck or homemade junk, but at the macro level, the terrifying (if not torrefying) equation simply doesn't add up.

At least we won't run out of java for the wake up call.

Black coffee, of course: the cow has been milked dry.

Seoul Village 2012
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Thursday, March 22, 2012

Every other Sunday

From April on, all hypermarkets and big stores in Korea will be forced to close every second and fourth Sunday of the month. The measure aims at protecting smaller players, and diminishing the market share of chaebols.

Of course, HomePlus-Samsung-Tesco, Lotte, eMart-Shinsegae, won't not lose it all: expect even more crowded Saturdays, and the acceleration of substitution by online shopping. And naturally, the clock keeps ticking for the bulk of traditional markets.

Yet I see a potential boost for diversity in leisure and cultural activities.

Seoul Village 2012
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Saturday, September 17, 2011

D-Cube City and Korean Food Street (Byeokgyesu)

If the recently inaugurated D-Cube City has quickly gained a solid reputation among local food lovers, it is well deserved.

Though less spectacular than Seoul Times Square (in nearby Yeongdeungpo-gu) architecturally speaking, the complex devoted more space for the comfort of its visitors, and developed a really original and consistent concept in the food department, with a clear editorial line around three major "verticals" : a trip back to 1920s Shanghai at "China Feng", a "World Street Food" with mouthwatering menus for Japanese food fans, and an already cult "Korean Food Street".

All three are located in the department store section (respectively 6F, B1, and B2), which also includes more classic restaurants and chains, and even a cute Pororo Theme Park. Beyond the dept store / mall : the D-Cube Arts Center, a D-Cube Park, the Sheraton Seoul D-Cube City (I took this view over Shindorim station and Guro-gu from their lobby - spectacular panorama on 41F), an outdoor park, offices and apartments... a major and ambitious project, but not a completely disruptive business model.

Now the food is really something you can't find elsewhere... The originality lies in the fact that it's really the original stuff. Cooks and dishes have been carefully sourced across the country and beyond. For instance, Michelin-starred Mist, the noodle expert, came from Tokyo. And even for such trivial stuff as ddeokbokki, the Chosen One is no other than Mimime : Hongdae's institution even closed shop there to open here - nothing changed regarding the queue, except that you don't have to wait outdoors anymore, and that you can do many other things while waiting for your food.

But the jewel of the crown is the Korean Street Food / Korean Food Street : a whole village full of life and terrific food. If the National Folk Museum of Korea were to propose a live show of Korean specialities, that would be it. The full course at Byeokgyesu costs only KRW 11,000 for lunch, and KRW 17,000 for dinner. It may look classic from a distance, but every single banchan has a unique story to tell and an incredible taste to reveal.

It's huge and seats hundreds, but very pleasant - you don't feel in some big food factory, rather in a festive village gathering. Everybody is smiling, simply enjoying the moment, sharing the experience.

D3 City (D-Cube City)
662 Gyeongin-ro, Guro-gu, Seoul 152-887 (360-51 Sindorim-dong)
website (nb: badly needs an update): dcubecity.com
Tel +82.2.2211.1000
D-Cube Korean Street Food / Korean Food Street (디큐브 한식 저잣 거리) : B2
Tel +82.2.2211.0730
. Byeokgyesu / 벽계수 (Korean Dining)
. Bandal / 반달 (Korean Pub)
. Yetsan / 옛산 (Korean Barbecue)
. Jatnamubae / 잣나무배 (Korean Snack)
. Dongjitdal / 동짓달 (Cafe)

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---
ADDENDUM 20110924
I found the business card I thought I'd lost, so I could detail the names of the different parts of the Korean Food Street, in particular the full course restaurant (벽계수).


Sunday, June 26, 2011

HomePlus virtual stores in Seoul subway : from your smartphone to Cannes festival screens

Cheil Worldwide won the Media Grand Prix at the 2011 Cannes Lions International Advertising Festival of Creativity for its amazing HomePlus campaign in Seoul subway, three years after claiming a bronze award for an outdoor advertising campaign "Plus to your life - HomePlus" with the same customer (Samsung Tesco).

Pushing to new levels the now decade-old barcode mobile advertising concept, "Homeplus Subway Virtual Store" transforms a subway station into a replica of supermarket where commuters can register and order online with their smartphones. This is not only spectacular and smart, but efficient : the number of subscribers and the turnover skyrocketed, helping the retailer overtake Emart as the national leader in online sales :



Of course, you don't want to miss your subway and you won't fill your virtual cart through this sometimes tedious process, but you can just load the first items and quietly finish shopping on the way home.

Expect more of these. I already can see Amazon setting up his own virtual libraries near rival brick and mortar shops...

Seoul Village 2011 - initially published on mot-bile ("HomePlus subway virtual store - 2011 Cannes Lions")
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Monday, June 13, 2011

Korea Inc. united for mobile payments

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore. SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...



The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.


Seoul Village 2011 - initially published on mot-bile (see all posts related to wireless in Korea).
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* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"

Tuesday, February 22, 2011

IKEA Korea

A couple of months ago, IKEA officials confirmed that South Korea was on their roadmap, but in the medium to long term (after Eastern Europe priorities). The Swedish company is already operating in the region (China, Hong Kong, Japan, and Taiwan), and of course, the Korea-Europe FTA could accelerate decisions for the Swedish retailer.

Meanwhile, some of its products are already on sale here, mainly items purchased in Chinese IKEA shops and shipped by resellers.

An unofficial store is even selling goods online and offline from Gyeonggi-do : DIY Korea shamelessly uses the ikeakorea.or.kr URL, which is not only mentioning the brand, but also under a theoretically non commercial or.kr domain.

Competitors seem to be bracing for the inevitable arrival of IKEA : Hanssem has considerably improved its marketing, merchandising, and logistics skills, and such retailers as CASA Korea contributed to the westernization of Korean interiors.

If the Korean market is not mature enough for the category killer, that's changing and quickly. New and fully equipped apartment complexes are losing ground to remodeling operations and more individual initiatives. And if it's still hard to compete with small 'gagu' manufacturers who can build and install custom furnitures at a very low price, DIY or gardening are on the rise (including at Tesco's and Costco's, who also seem to be leveraging on the growing expat communities and individual entrepreneurs to extend their DIY / gardening sections).

As always, when a major franchise reaches Korean shores, there's a mixed feeling, and the hope that, in spite of the loss, creativity will be spurred.

Seoul Village 2011

Monday, July 19, 2010

Online sales become the first distribution channel in Korea - or is door-to-door back ?

When I first came to Korea 20 years ago, Department Stores were becoming the main distribution channel for many consumer goods, taking over traditional door-to-door sales.

Convenience stores (FamilyMart, LG25 - now GS25 -, BuyTheWay, 7Eleven...) were also gaining ground. Then came the hypermarkets (eMart, Carrefour at one moment, Samsung / Tesco HomePlus, Lotte Mart...), and the SSMs / SuperSuperMarkets (Lotte mySuper, HomePlus Express, eMart Everyday...).

One by one, small groceries / mom & pop stores closed, and traditional markets plummeted, killed by discount shopping (or supposedly "discount" shopping : a recent survey pointed out that for many food items, traditional markets are actually cheaper). Survivors could count on a system that protected both food majors and small distributors : product packaging including the price tag regardless of the sales channel guaranteed the same price for such basic items as instant noodles or ice creams. But this system is about to be abandoned and anyway, it didn't mean much anymore : big discounters sell their own brands of instant noodles, and my local SSM offers a year-round 50% discount on all ice creams.

Even as competition raged between discount shops, many opening 24/7/365, Department Stores (Lotte DS, Shinsegae DS, Hyundai DS, Galleria DS...), sometimes growing into ambitious complexes (ie Shinsegae Centum City in Busan) remained ahead for many consumer goods and fashion.

Until now : online sales have just become Korea's first distribution channel.

This doesn't come as a surprise for anyone living in "ubiquitous" Korea : beyond pure players (ie Auction), even brick and mortar leaders are pushing ecommerce very hard, prefering cannibalization to the loss of a customer.

Somehow, we're back to square one and door-to-door sales. The first door is your mobile, PC or TV screen, but everything is done to deliver it wherever you live (home deliveries keep booming), wherever you work (Seoul would collapse without cheap express deliveries), and even wherever you go (ie location based services and mobile couponing).

Like for ADSL or FTTH, Korea's economy of access is unbeatable. Because of urban density, because major players are ready to offer what comes as a premium anywhere else, and furthermore because in many cases for smaller fish, the last mile is provided by people working under the legal hourly wage, ready to make a buck even if it doesn't make any sense if you simply take into account transportation costs. When you see a truck carrying about five hundred eggs on a highway, you know something is wrong. And when you order a book online, the delivery person is rarely twice the same plain-clothes individual.

I guess that's one of the reasons why Amazon is not in Korea. The retailer tried to do some business via Samsung / SIMS more than ten years ago but failed. So Amazon ships from other countries to international customers while Kim & Chang law firm securely protects Amazon.co.kr URL.

Of course, Amazon would face pure players in cultural goods, such as Aladdin (now Aladin.co.kr), or Kyobo Book Center (very ambitious in the ebook ecosystem), but I don't think it's about competition : players differenciating themselves on logistic platforms tend to struggle here. Carrefour left the country in spite of commercial success for regulatory reasons : it couldn't operate with its usual purchasing power model. I think the logistics equation could be very tricky for Amazon.

eBay is faring much better in Korea (as Auction.co.kr) - it even wolfed down G-market, snatching it away from Inter Park... but eBay is more into auctions and C2C than into retailing and B2C. And when it advertised massively on internet shopping, big retailers pushed the pedal to the metal.

But the biggest revolution for e-commerce in Korea this year is the end of Microsoft Explorer's de facto monopoly since July 1st : since 1999, all online shopping and banking services had to use ActiveX systems, but the Financial Services Commission put an end to it following the recent boom in smartphones.


Seoul Village 2010

Friday, June 22, 2007

Carrefour Junggye

Copyright Stephane MOT
Seoul - Nowon-gu - Junggye - Carrefour Junggye
Photo : "Carrefour du developpement" (Copyright Stephane MOT 2004)

The World's #2 retailer decided to leave Korea in 2006. Carrefour was eventually starting to earn something (and to export varieties of fresh products from small to medium sized Korean producers for its stores in France), but it just couldn't replicate its usual business model : you are not allowed to make purchases at the group level and thus make a difference at the logistics level. Even Wal-Mart failed. Price killers do exist though : you always find ways of crushing producers.


I'm not worrying for Carrefour. They got more than they could dream of from E.Land, who launched a weird mallish concept called Homever late last year.


It's just that you don't find big juici Nashi pears in their Paris store anymore. And Homever's bookstore is less fun to watch : each time I passed by, tens of kids would be sitting everywhere (even in shopping carts - see pix), reading books and not often of the comics / manga kind.


20070622