Musinsa Strengthens PB... Capturing Distribution and Manufacturing at Once

Musinsa Standard Opens Offline Store in Daegu
Offers Various Styles... Actively Utilized as a Sales Channel
Enhances Awareness and Accessibility... 'Online Synergy' Expected
Growth in PB Business... Positive Cycle Anticipated for Platform Business

MUSINSA is strengthening its private brand (PB) business by opening an offline store of its own casualwear brand, ‘MUSINSA STANDARD,’ in Daegu Dongseong-ro. By expanding offline stores, the strategy is to increase the accessibility and recognition of MUSINSA STANDARD, which was previously online-centered, and to make the apparel manufacturing business another stable growth engine alongside the existing fashion platform business. The growth of the private brand is also expected to enhance the competitiveness of the existing platform business by increasing platform visit incentives.

Exterior of 'Musinsa Standard Dongseongro'.

Opening the largest store in Daegu Dongseong-ro... “Focus on sales”

On the 22nd, MUSINSA began operating the flagship store of its private brand MUSINSA STANDARD, ‘MUSINSA STANDARD Dongseong-ro.’ This is the third offline store of MUSINSA STANDARD following Hongdae and Gangnam in Seoul, and the first store outside Seoul. The Dongseong-ro store, with a space of approximately 1,765㎡ (534 pyeong) spanning five floors from the 3rd floor above ground to the 2nd basement floor, is the largest among all MUSINSA offline stores.

Visiting the day before the opening, MUSINSA STANDARD Dongseong-ro emphasized its role as a traditional offline clothing store. This contrasts with the recent trend among fashion companies to configure offline spaces by showing minimal styling. About 400 styles are displayed at the Dongseong-ro store, which is more than 30% higher than existing stores. Because of the variety of styles shown, the number of mannequins was increased about threefold compared to existing stores, according to MUSINSA.

Recently, most companies including those in the fashion industry focus on designing offline spaces such as flagship or pop-up stores as places to showcase and enjoy the brand identity rather than as direct sales spaces. However, MUSINSA STANDARD Dongseong-ro is expected to utilize the offline store not merely as a showroom but as a distribution channel where direct sales can occur on-site by offering customers as many styling options as possible.

Sun Jin-young, head of MUSINSA STANDARD’s offline division, explained, “While the initial offline business focused on allowing customers to directly experience the MUSINSA STANDARD brand they knew online, going forward, we plan to actively expand and grow the offline market as well as the existing online market to increase the business scale.”

This intention of MUSINSA is most actively reflected in the fitting rooms. Responding to customer feedback about the lack of fitting rooms, the Dongseong-ro store installed a total of 28 fitting rooms, twice as many as existing stores. Among these, three are operated as ‘live fitting rooms,’ equipped with display screens capable of mirroring and adjustable lighting, providing a differentiated brand experience for customers who want to record their appearance wearing selected products.

Besides fitting rooms, the Dongseong-ro store also features various focus zones highlighting exclusive products sold only there, leather shoes, underwear, and other specific product categories to increase store visit incentives. In particular, the ‘Slacks Focus Zone’ allows customers to try on and purchase 25 out of 38 slacks in the full lineup, which is a representative steady seller. Additionally, the O2O service ‘Mutan Pickup Locker’ is operated, allowing customers to pick up products ordered online at the offline store.

'MUSINSA STANDARD Dongseongro' Fitting Room

MUSINSA STANDARD, the key to MUSINSA’s lock-in effect

MUSINSA is focusing on the MUSINSA STANDARD business while expanding offline stores because there are limits to growth relying solely on transaction fees earned from the platform business. Therefore, it aims to diversify its business by growing its private brand business to maintain stable growth.

MUSINSA has been rapidly expanding its scale every year. Its consolidated sales last year reached 708.3 billion KRW, a 53.6% increase from the previous year (461.2 billion KRW). Compared to 2019 (219.7 billion KRW), sales more than tripled in three years. It is not just about size; MUSINSA is one of the rare platform companies maintaining profitability. It recorded an operating profit of 58.5 billion KRW in 2021, and although it decreased to about 3.2 billion KRW last year, excluding some underperforming subsidiaries like SoldOut, MUSINSA still maintains operating profits in the 50 billion KRW range.

The core of MUSINSA’s growth is the commission fees received as a platform company. However, the recent acceleration in growth has been driven by the private brand business centered on MUSINSA STANDARD. MUSINSA does not disclose MUSINSA STANDARD’s sales directly, but product sales, which provide an indirect glimpse, increased by 105.9% last year to 179.4 billion KRW, accounting for about 25% of total sales.

MUSINSA’s product sales were only 800 million KRW in 2018 but rose to 3.3 billion KRW the following year, 83.1 billion KRW in 2020, surpassed 87.1 billion KRW in 2021, and approached 200 billion KRW last year. MUSINSA stated that MUSINSA STANDARD’s sales exceeded 200 billion KRW last year and that this year’s growth rate has already far surpassed last year’s, making it certain that the recent steep growth trend will continue this year.

The rapid growth of MUSINSA STANDARD was largely influenced by leveraging the advantage of being a platform operator to compete with cost-effective products by reducing distribution margins. MUSINSA STANDARD adopts a strategy of increasing the cost ratio to offer higher quality products than competitors, even if it means reducing margins, thereby enhancing consumer satisfaction. MUSINSA STANDARD’s cost ratio is known to be around 60-70%, which is quite high considering that typical SPA brands have cost ratios of 30-50%. The reduced margin due to the high cost ratio is offset by saving on transaction fee costs. This strategy is possible because MUSINSA’s huge platform is effectively free to use.

Additionally, the timing advantage of the boycott of Japanese products at the launch also played a role. MUSINSA STANDARD, first introduced in 2017, rapidly grew as a substitute for the SPA industry’s top brand ‘Uniqlo’ during the intensified No Japan movement in 2019. The Daegu store also took over the space that had been vacant for over a year after Uniqlo closed.

'MUSINSA Standard Dongseongro' 3rd Floor 'Slacks Focus Zone'

By expanding its private brand business, MUSINSA plans to strengthen the sustainability of its platform business by increasing visit incentives to the MUSINSA platform, while also focusing on achieving two goals: dominating the domestic SPA brand market and expanding MUSINSA STANDARD’s regional bases starting with Daegu.

Next month, a new store will open in Seongsu, Seoul, followed by another in Seomyeon, Busan, within the year. Head Sun evaluated, “Offline stores are spaces where customers can experience a variety of products and increase brand loyalty.” He added, “Operating stores in Hongdae and Gangnam taught us that we can meet customer segments offline that we couldn’t reach online. While online customers visit offline stores, we expect a synergy effect where customers first experience MUSINSA offline and then return online.”

This content was produced with the assistance of AI translation services.