Shinsagae & Chealsea Outlet Posts Little Profit

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Summary
The first American-style fashion outlet that opened last year in Yeoju, southeast of Seoul, reported a mediocre performance in its first seven months.
Shinsegae & Chelsea had only 430 million won in net profit between June and December 2007, according to the Korean firm's audit report. The profit came from 11.9 billion won in commission from tenants. It is an unexciting financial performance for the ``premium'' fashion mall, which opened last June with big fanfare from locals and the company. The mall operator said that its business is actually more profitable than the numbers suggest because net profit is leftover from royalties paid to its parent firms, Shinsegae & Chelsea, respectively and they had set a sales target for the mall between 160 billion and 200 billion won for the first 12 months. It seems that we will be able to achieve that goal.
The mall has received attention from Korean shoppers, especially those who have complained about the relatively high prices of foreign luxury brands in Korea. In its early days, the mall was notorious for long queues, crowded stores and a lack of resting places. The situation has improved in general over the next few months as the number of visitors decreased during winter.

My Opinion
While I was reading over this article, I was looking for more about such interesting article like Shinsegae-Chelsea Outlet. When the Shinsegae shopping mall has been out to public last year, I have took a close attention to it.
First of all, Shinsegae-Chelsea Outlet mall insisted the image of American boutique style at first in Korea as their marketing strategy. Due to great interest in boutiques those of new generation in Korea, this sort of strategy fits appropriately in this situation. They also specifically targeted the main spot of Kang-Nam customers. As a result, they have reached the goal which they have targeted in major Seocho and Kang-Nam area in Seoul more than 50% visited customers and out of them are VIP Passport customers (membership only if you purchase more than 1 million-won). However, it was the way lower net profit rate compared to other competitive markets even though they have made more than thousand billion won sales. This had caused by very low lease commission.
It’s not only facing the problem with setting up lower fixing rate, but their purpose to achieve as boutique outlet mall with lower negotiation strongly affected by low lease commission. In addition, currently Shinsegae-Chelsea Outlet has been criticized by those customers. Above all, they are only categorized maximum ten brands also facing with operating problems such as difficulties in refund and goods in exchange. Although they have succeeded in attracting many customers, vice versa, much same problems also have identified.
Concerning with location for customers and close attention for boutique outlet marketing strategy had been successful. However, providing false information to customers is wrong. In addition, true marketing success comes from certain infrastructure of business strategy environment. If there are trivial defects in operation even though they use amazing marketing strategy, creating profit purpose has to be main concern for business.
#20400251 Entry #7