[Summary] Apple Enters Yeouido, Accelerates Korea Strategy... Targeting Top Two Without LG?

Apple Yeouido

[Asia Economy reporters Seulgina Jo and Minyoung Cha] Apple is accelerating its push into the Korean market by opening its second Apple Store in Yeouido, Seoul, after more than three years. It appears to be aiming to fill the void left by LG Electronics, a long-standing player in Yeouido, which is on the verge of withdrawing from the smartphone business. Apple, which once faced criticism for neglecting Korea, has been focusing on securing domestic market share since the launch of its first 5G smartphone, the iPhone 12, last year, capitalizing on 5G replacement demand. The opening of additional stores is also seen as a move to expand its territory and not fall behind Samsung Electronics in the duopoly competition.

◆Apple Store 2nd Branch in Yeouido... Opening at 10 AM on the 26th

Apple Korea held a preview event on the morning of the 24th at the Yeouido IFC Mall to introduce the country’s second Apple Store, ‘Apple Yeouido.’ Located in the political, economic, and broadcasting hub of Korea, Apple Yeouido will officially open at 10 AM on the 26th. Due to COVID-19, visits are possible only by reservation. Deirdre O’Brien, Apple’s Senior Vice President of Retail and People, said, "The passion and love of Korean customers inspire all Apple employees," adding, "It is a great honor to meet more customers in a space more than twice the size of Apple Garosugil since its opening in Korea."

Apple Stores, symbolic and considered landmarks in each region, are not just places to sell products but flagship stores designed for consumers to experience and interact with Apple products directly. Currently, 510 stores operate across 25 countries worldwide. In Korea, the second store has opened about three years after the first Apple Garosugil store opened in Sinsa-dong, Seoul, at the end of January 2018. Apple Korea introduced, "Apple Yeouido will be an important milestone in the journey to grow the Apple brand in Korea." The custom logo for Apple Yeouido, revealed alongside on-site partitions, was designed by Seok Yoon-yi and inspired by the high-rise buildings of Yeouido.

Following Yeouido, the third and fourth stores are expected to open soon in Myeongdong and Haeundae, Busan. Considering that when the first store opened, there were continuous controversies over Korea being neglected with schedules delayed by several years compared to neighboring countries, the simultaneous push to open multiple Apple Stores domestically is regarded as highly unusual. Apple is currently conducting construction for the third store in the Centerpoint building in Myeongdong, expected to open as early as August.

◆"Capture 5G Replacement Demand"... Will Apple Take LG’s Market Share?

Apple’s recent moves are interpreted as targeting the rapidly growing 5G smartphone market. In Korea, known as the ‘graveyard of foreign phones,’ Apple is the only foreign company to secure double-digit market share, which rose to the 20% range after the launch of the iPhone 12. According to Counterpoint Research, the share of 5G phones in domestic smartphone sales is expected to expand from 28% in 2019, the first year of commercialization, to 87% this year. Apple Garosugil, which opened 15 years later than in Japan, has become the most popular Apple Store worldwide.

Especially, the importance of the Korean market has increased globally in terms of securing 5G leadership. Since the number of countries offering 5G services is still limited, Apple has no choice but to focus on Korea, which was the first country to commercialize 5G and has well-established infrastructure. Apple’s inclusion of Korea as a 1.5 phase launch country during the iPhone 12 release last year is also interpreted as a reflection of this judgment. Until the iPhone 11, Korea was not even listed as a second-phase launch country.

Moreover, Yeouido, where the second Apple Store is located, is attracting attention as it is also home to LG Electronics’ headquarters, which is currently considering withdrawing from the smartphone business. Since LG Electronics holds a market share in the 10% range domestically, if it exits the smartphone business, it is expected that the competition for that market share will be between Samsung Electronics and Apple. Apple’s recent strengthening of its budget line, in addition to its premium product lineup, is also related to this. An industry insider said, "As the Korean market is expected to solidify into a Samsung Electronics vs. Apple duopoly, Apple’s changed approach is evident," adding, "It seems they will focus on 5G replacement demand."