Economic Overview
In December 2022, the Consumer Composite Sentiment Index (CCSI) rose 3.4 pp from the previous month to record 89.9. The CCSI rebounded following two consecutive months of decline, thanks to employment growth in the services sector and slowed inflation, despite uncertainties and concerns over a global economic slowdown. The consumer price inflation rate recorded 5.0%, and as high prices have persisted at more than 5% for eight consecutive months, the annual consumer inflation rate in 2022 recorded 5.1%, the highest since the 1997 financial crisis. Consumer prices in 2023 may be negatively affected by oil and utility price hikes, but demand-side inflationary pressure is not expected to be high, with fears over economic recession.
In the Heyday of the Pop-up Store, Seongsu Emerges as a Brand Battleground
The retail industry has entered the heyday of the pop-up store. According to Google trend data, South Korea search volume for "pop-up store" in 2022 grew by 3.8 times over 2021. This appears to be a global trend, with the size of the pop-up store market in the United States in 2021 reaching $14 billion, or approximately KRW17 trillion, according to IBISWorld. Pop-up stores are becoming both an essential strategy for brands and a space offering new experiences for consumers.
A pop-up store is a temporary structure operated with a specific concept for a certain period. Formerly a space primarily to showcase new products, the pop-up’s key objective now is to build brand image. Consumers who are accustomed to online shopping are now going beyond mere purchase of goods offline, and are pursuing consumption activities where they can express themselves through experiences. In response, brands are providing in-person experiences which can help drive consumer brand preferences. Pop-up stores allow brands to flexibly operate retail spaces with lower costs than traditional stores, and landlords can boost retail footfall and earn short-term profits by utilizing vacancies. Brands’ strategies of opening spaces with individual identities and creativity has become key to differentiation among a flood of pop-up stores.
Seongsu commercial district has emerged as a battleground for the fast-growing pop-up store market. Brands open pop-up stores in high-traffic areas to reach potential customers. In the aftermath of COVID-19, foot traffic on major high streets in Seoul dropped by about 26% in 2022 compared to 2019, whereas Seongsu grew by 14%. Millenial and Generation Z consumers seeking fresh content are flocking to Seongsu, and various industries, from tech firm Meta to luxury brand Dior, have opened pop-up stores in Seongsu targeting them. With the flurry of new pop-up stores every week, a rental space business dedicated to pop-up stores now operates in Seongsu. While consumers who visit pop-up stores contribute to vitalizing the district, pop-up and Seongsu stores are creating a virtuous cycle, establishing a strong relationship.
