Fashion Giants Lower Their Pride for MZ's 'Musinsa Love'

Musinsa Surpasses 1 Trillion KRW in Transactions Last Year
Growing Influence in the Fashion Market
Companies Restructure Business Online to Secure Customers

[Asia Economy Reporters Lim Hye-seon and Lee Seung-jin] Domestic fashion conglomerates, once proud and aloof, are rushing to enter the fashion-specialized online mall Musinsa. Just three years ago, Musinsa was regarded as a ‘passing trend’ or a ‘gathering place for individual Dongdaemun brands,’ but after a year of COVID-19, it has established itself as the largest fashion platform in Korea.

Conglomerates Rush to Enter Musinsa

On the 10th, domestic fashion conglomerates accepted Musinsa’s condition for entry, which requires a ‘sole entry brand contract,’ and have begun entering the platform. Designer luxury brand Juun.J from Samsung C&T Fashion Division and American contemporary brand Theory recently entered Musinsa exclusively. This is the first time these two brands have entered an online distribution channel.

LF added street casual brand Dunst and Jill Stuart Sports New York, while Shinsegae International included Studio Tomboy and Juicy Couture on Musinsa. Fila Korea is also selling its ‘online exclusive collection’ only on Musinsa. Since they are paying department store-level commissions and even releasing exclusive products not available on their own online platforms, the industry is evaluating that “the fashion market has undergone a drastic transformation.”

Musinsa, which started in 2001 by CEO Jo Man-ho from the Freechal online community ‘a place with a lot of shoe photos,’ surpassed 1 trillion KRW in transaction volume last year. Recognized as Korea’s 10th unicorn company (a startup valued over 1 trillion KRW), Musinsa’s influence in the fashion market is growing. A fashion industry insider explained, “In fact, the entry commission for famous platforms is around 30%, similar to department stores,” adding, “The balance of distribution power has shifted to platforms, but the difficulties for fashion brands remain.”

Last year, over 50 domestic fashion brands ceased operations. Hyunwoo International, which owns Le Shop, filed for court receivership. Kappa Korea also entered corporate rehabilitation procedures. Conglomerates were no exception. Shinsegae International discontinued its menswear brand Komodo, and Lotte GFR closed all but two brands. Although they closed offline stores and launched their own online platforms, they were insufficient to capture the MZ (Millennial + Z) generation. This is the background behind their move to enter Musinsa.

Business Restructuring Focused on Online

Samsung C&T Fashion Division restructured its business this year to focus on online. It integrated online and offline sales organizations into a single sales headquarters and established a sales strategy department.

LF established a ‘V-commerce’ department last year, focusing on securing digital content competitiveness. This department, which oversees live broadcasts through LF Mall, recently held Korea’s first fashion YouTuber audition. Under the leadership of CEO (Vice Chairman) Oh Gyu-sik, over 100 street stores nationwide have begun converting into ‘LF Mall Stores.’ This strategy involves placing about 6,000 small and medium brands listed on LF Mall into stores tailored to local commercial characteristics, strengthening the ‘O4O’ strategy that links offline and online.

Fila is reflecting the tastes of the MZ generation more broadly by launching the trendiest online-only collections. It has also established an O2O (online-to-offline) system linking online and offline.

Professor Chae Jin-mi of Hansung University’s Department of Clothing and Fashion Industry explained, “The decline of offline stores is a global phenomenon, and the change will be that offline supports online,” adding, “Offline stores should be transformed from mere product display spaces into personalized spaces reflecting customers’ lifestyles.”