North Face slips, Kolon rises in Korea as the domestic outdoor fashion industry undergoes a major shakeup

2013-10-18 18:03

North Face slips, Kolon rises

By Park Ji-won
The domestic outdoor fashion industry is undergoing a major shakeup in pecking order, as The North Face, the industry leader, is struggling to maintain the top post, while competitors are catching up fast with aggressive marketing. The rapidly-changing business environment triggered by the prolonged economic slump has changed the landscape of the industry. The North Face is losing ground, while its rivals Black Yak and Kolon Sports have strengthened their foothold through aggressive marketing.According to industry sources, The North Face posted sales of 380 billion won for the first nine months of the year. Black Yak and Kolon Sports recorded sales of 370 billion won and 350 billion won, respectively, during the same period. NEPA posted 300 billion won in sales. Black Yak was No. 4 in sales last year, while K2 ranked second.
“It is not an easy battle for The North Face, who has been the market leader for 10 years, to keep its seat because other outdoor brands are gearing up to raise their customer awareness by putting a lot of money in marketing,” a market insider said.
As a result of the cutthroat competition, the operating profit for The North Face stood at 11 billion won in the first half, down 40 percent from a year ago, according to DART Financial Supervisory Service.
“The rising advertising costs were the key culprit behind falling profits at The North Face,” said a market insider.
The firm has recently introduced three popular celebrities in their 20s this year. “As we introduced various product lines, we hired different celebrities who could express our products through a different style,” said Kim Woo-gyeong, an official at The North Face.
Other outdoor brands are also aggressively advertising their products by using celebrity marketing mainly through TV commercials to increase their market shares.
For example, LaFuma, an outdoor affiliate of LG Fashion, launched a TV commercial with two popular celebrities in their 20s when first introducing their brand to the market.
“LG Fashion expects to raise awareness in the market through celebrity advertisements,” an official at the firm said in a statement. “A lot of money is required to hire celebrities as models; however, we make an effort to get our share of the market because there is room to grow in this industry,” manager Marcus Lee said.
BeanPole Outdoor, an affiliate of Cheil Industries, also launched a TV commercial with two leading celebrities, as well as introducing its first hiking shoe line.
“Hiring celebrities is a sign that a firm is willing to actively make an effort in the market. We also saw some rising brand recognition from customers after hiring celebrities,” official Yang Hee Joon said.
Major brands, including The North Face, plan to focus on enhancing sales in the down jacket market to garner bigger market shares because it normally accounts for 60 to 70 percent of the second-half revenue.
The outdoor fashion market is expected to reach 6.4 trillion won this year, according to SamsungDesignNet.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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