Tuesday, October 30, 2007

The Shop Around the Corner

Recently a new branch of Hi-mart, an electrical goods chain, opened near us. Too near - their constant appeals for customers during their first few days left me feeling a little like I lived in some kind of totalitarian state demanding obedience to the Party. Or maybe I do - except the Party here stands for ideological consumerism.

Even if they hadn't been giving away a few high-priced electrical items and a couple of hundred USB memory sticks to begin with, the next few days suggested they wouldn't have had any trouble bringing people in, and clearly this wasn't mere browsing; from the queues at the tills they were making good money, even if they were shutting at 9pm which by the standards of some stores is quite early in Korea.

What struck me as slightly odd about this was that this new store opened at all. Back in the UK, electrical chains have been closing down small stores partly in favour of consolidating at larger sites, and partly in favour of moving to the Internet. One former fixture of the British high street, Dixons, has in fact moved entirely to the web now. Retail rents are high and margins are wafer-thin so it makes a lot of sense to shift to a lower-cost strategy if you can get away with it - which is a tough proposition when British people still show some reluctance to make major purchases online.

One might have thought that by comparison Koreans would have been more willing to buy electrical items on the Internet, and given that Hi-mart was founded in 1993 (edit: or was it 1999?) - compared to Dixons 1937 - it's not as though they have a large number of legacy stores to try and make work. But evidently, opening new retail space can be profitable, and while stores back home retreat from the high-street to the Internet, for some reason, if anything the opposite may be true in Korea.

Korean tags: 가게, 소음, 사다


Anonymous said...

They were shopping around the chain for $2 billion dollars back in August. I think for some higher ticket items like air conditioners, washers, fridges etc. that having a front line display is still hard to replace by online shopping.


Anonymous said...

Here's an article on HiMart, though it says the company was founded in 1999.


Mike said...

Thanks for the link Mark - I got the 1993 from the Wikipedia entry - probably just proves you can't trust everything you read on there!

The odd thing about the big ticket items - and I think you're right - is that the UK chains seem to be thinking that if they move to the Internet people will just have to buy online and put up with it. I know from reading company reports an increasing problem is that customers come to their stores - play with the items - then go home and get a cheaper price on the Internet. So there's little money in it for stores that have to compete with 'Net pricing.

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