Over the weekend on the 24th, at the complex shopping mall ‘Lotte Mall Velitaun Cheongnyangni’ located in Dongdaemun-gu, Seoul. The Daiso store on the 3rd floor, with a scale of 1,652.9 square meters (500 pyeong), was the largest among the approximately 50 stores in the mall, yet the spaces between display aisles were packed with people. People carrying Olive Young and Musinsa shopping bags were also spotted here and there. In fact, on the 2nd floor of this shopping mall is the ‘Musinsa Bag & Cap Club’, and on the 1st floor is CJ Olive Young. This coming December, Musinsa Standard will open on the 1st basement level with a scale of 1,984 square meters (600 pyeong). In other words, the so-called ‘ODM’ (Olive Young, Daiso, Musinsa) is positioned floor by floor from the 1st basement level to the 3rd floor above ground. Office worker Mr. Lee, in his 20s, said, “Daiso, Olive Young, and Musinsa are all in one building, so I come to this shopping mall often.”

The powerful customer-attracting power of ODM is emerging as a ‘box office guarantee’ for large shopping facilities such as shopping malls, department stores, outlets, and hypermarkets. The distribution industry is consecutively attracting the three brands as core stores to draw in customers. Analysis suggests that this phenomenon is becoming more pronounced as rational consumption, which prefers satisfactory quality at reasonable prices, spreads.

According to the distribution industry on the 27th, out of a total of 2,951 stores for Olive Young, Daiso, and Musinsa Standard, 467 (about 16%) are located in large shopping facilities. In particular, 36 (82%) out of the total 44 stores of Musinsa Standard have entered shopping malls, department stores, and outlets. An industry insider said, “Just as the competitiveness of department store luxury halls depended on the so-called ‘ELS’ (Hermès, Louis Vuitton, Chanel), talk has it that the success of shopping facilities is dictated by ODM.”

In the past, large shopping facilities and ODM were competing relationships. Existing distributors also had a strong perception that “ODM takes away customers from existing stores.” However, as domestic consumers' luxury spending shrank and the popularity of ODM, which highlights cost-effectiveness, grew, the atmosphere changed. The fact that ODM has established itself as an essential shopping course for foreign tourists visiting Korea, riding the K-beauty and K-fashion wave, has also had an impact. Distributors are now changing their strategy to actively utilize the customer-attracting power of the three brands. This is because customers who visit ODM can lead to additional consumption by using other stores or restaurants within the shopping mall.

The customer-attracting effect of ODM is also confirmed in sales and customer numbers. According to Lotte Department Store, a total of 20,000 customers were tallied as having purchased items at the ODM stores of Lotte Mall Velitaun Cheongnyangni from the 23rd to the 25th. Actual visitors are estimated to be more than twice this number. In the actual shopping mall, shoppers could be seen moving their steps to 1st-floor cafes or bakeries, and 3rd-floor clothing stores after buying goods at ODM stores.

ODM entry sometimes leads to performance improvements for the entire shopping facility. Starfield Market Ilsan branch saw its sales increase by 90.7% and the number of customers by 134.9% compared to the same period last year for one year after ODM consecutively opened or expanded store sizes starting June last year. Starfield Market Wolgye branch also expanded its Olive Young store to 330 square meters (100 pyeong), three times larger than before, in August, and saw its sales and customer numbers increase by 27.1% and 26.6% respectively over two months until the 26th of this month.

Once the ‘ODM effect’ was confirmed, the distribution industry has been putting effort into attracting all three brands. Starfield Village Unjeong, a complex shopping mall, saw the three brands enter sequentially from the end of last year to May of this year, and Siheung Premium Outlet operated by Shinsegae Simon also attracted all of ODM. From the perspective of shopping facilities, operating large stores—which most ODM brands do—helps secure stable rental income.

Entering shopping facilities also has advantages for ODM. They can use convenient facilities within the facility such as parking lots and restrooms, and open large stores in places with a high floating population and convenient transportation. A Daiso official said, “Mutual interests align to create a ‘win-win’ situation.”

Lee Jong-woo, a professor of distribution marketing at Namseoul University, forecasted, “As rational consumption spreads amid high inflation, the competition among shopping facilities to attract brands that boast price competitiveness, quality, and brand awareness will continue.” He also advised, “Rather than focusing only on expanding store openings, ODM must also pay attention to the operation and quality management of individual stores.”

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