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RETAIL MARKET REPORT

Q3 | 2018 01. Key Market Indicators 03 02-3. Gwanghwamun/CBD District 13 TABLE OF 01-1. Macroeconomic and Consumption Trends 04 02-4. Yeouido District 16 CONTENTS 01-2. Trends in Major Distribution Channels 05 02-5. Hongdae/Hapjeong District 19 02. Trends in Major Districts 06 Summary: Trends in Major Districts 22 02-1. Gangnam Station District 07 03. Retail Trends and Issues 23

RETAIL MARKET REPORT 02-2. Myeongdong District 10 KEY MARKET INDICATORS

01-1. Macroeconomic and 04 Consumption Trends 01-2. Trends in Major Distribution 05 Channels

RETAIL MARKET REPORT 01-1 Macroeconomic and Consumption Trends

Consumer Price Index Rate Source: Bank of Korea Retail Sales Amount Source: Statistics Korea

All items (M-o-M) All items (Y-o-Y) Living necessaries (Y-o-Y) Retail Sales Amount (Left) Y-o-Y Growth Rate 2018Sentiment년 초 소비자물가는 Index Q3 안정화, 2018 소비심리는 낙관적 (%) (Trillion Won) 39 (%) 추세Continues 지속 to Decline 4 40 10

39 8 3 38 ● Over the last 12 months, consumer price growth has remained at 37 6 1%, with the exception of September when the consumer price 2.2 2 36 1.9 growth recorded 1.9%, nearly reaching 2%. The cost of living neces- 4 35 saries in September also increased 2.2% y-o-y due to agricultural 2.95 1 34 commodity price increase caused by August heat wave, high oil 0.7 2 33 price and discontinued summer electricity discount. 0 32 0 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 7 8 9 10 11 12 1 2 3 4 5 6 7 8p 9p ● Retail sales are recorded at 39 trillion won in September, which is

2017 2018 2017 2018 a big drop in the growth rate when compared to the last month. -1 Sales have lowered because of decreased in durable goods such as * August & September 2018 : Predicted figures automobiles and the number of foreign tourists.

● Sentiment index for Q3 2018 reached over 100 (101) but continued Consumer Trends Survey Source: Bank of Korea Consumer Sentiment Index Source: Bank of Korea to lower since Q4 2017.

Household Income Consumer Sentiment Index Forecast Expenditure Forecast

110 115

108 110 106 105 104 105

102 101.0 100 100 99 98 95

96 90 94

92 85 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2017 2018

04 Q3 2018 RETAIL MARKET REPORT 01-2 Trends in Major Distribution Channels

Retail Sales Amount by Retailer Type Source: Statistics Korea Retail Sales Growth Rate by Retailer Type (Y-o-Y) Source: Statistics Korea

Department Stores Hypermarkets Convenience Stores Non-Store Retail Supermarkets and Grocery Stores Department Stores Hypermarkets Convenience Stores Non-Store Retail Supermarkets and Grocery Stores (Trillion Won) (%) 7 40

6 5.7 30 5 4.3 20 6.8 4 6.7 6.5 3.3 10 3 5.7 2.7 5.6 0 2 2.2 7 8 9 10 11 12 1 2 3 4 5 6 7 8p 9p 2017 2018 1 -10

0 -20 7 8 9 10 11 12 1 2 3 4 5 6 7 8p 9p 2017 2018 -30 * August & September 2018 : Predicted figures

Department Stores Hypermarkets September retail sales up by 2.95% year on year. Consumption increased due to record-breaking heat waves and 52 hour Number of new hypermarkets with innovative ideas such as space design Department stores, hypermarkets and shopping maximum working week law and changes in merchandise planning have been increased complexes that have new content increased in ● To avoid the heatwaves, increased number of consumers, known as ‘Baecance ● Some discount warehouse and flagship stores (large general hypermarkets) have (Rest in department store)’ visitors surged into department stores. These consum- expanded. sales while convenience stores, ers increased the visiting hours at the department stores. ● Shop-in-shops and areas to rest are being made to increase the shopping time

all other non-stores, supermarkets ● Because of the 52 hour maximum working week law, consumers have more time of consumers. and grocery stores decreased in sales. to shop at department stores and enjoy their free time. ● These hypermarkets are looking for internal changes. For example they want to ● An important thing to know is that sales on foreign luxury items and men’s fashion install the number of self check out options to reduce the amounts of cashiers goods have increased. needed.

Convenience Stores Non-Store Retail Shopping complexes

Growth is low due to the minimum wage increase and low consumption Consumption decreased due to contracted consumer sentiment while Sales in Q3 increased due to heatwaves and more free time of consum- by consumers overseas direct purchase hit record high ers

● Store expansion has lowered because of the minimum wage increase and sup- ● Q3 sales at all other non-stores decreased due to the contracted consumer senti- ● Because consumers have more free time, shopping complexes are trying to make porting win-win costs. This channel is looking for an answer through a strategy ment. the interior design more pretty. For example, experimental content for consumers

to reduce sizes. ● On the other hand, overseas direct purchase hit record high. are being provided: areas for kids to play, sports areas, and entertainment areas.

● This channel uses the MD structure by targeting one-person households and in- ● Out of the non-store retails, online shopping achieved sales increase in July and ● There has been an increase in consumers who like indoor activities because of creasing market shares of PB brands. August but decrease in September as a result of sweltering heat and tropical the weather. As a result, shopping complexes are now offering one-stop services nights. (shopping, dining, activities) to satisfy consumers.

05 Q3 2018 RETAIL MARKET REPORT TRENDS IN MAJOR DISTRICTS 주요 상권 동향

02-1. Gangnam Station District 07 02-2. Myeongdong District 10 02-3. Gwanghwamun/CBD District 13 02-4. Yeouido District 16 02-5. Hongdae/Hapjeong District 19 Summary: Trends in Major Districts 22

RETAIL MARKET REPORT Seoul Main Customs

Banpo Gangnam-gu Office Nonhyeon Hak-dong

Imperial Palace Seoul Cheongdam 02-1 Trends in Major Districts: Gangnam Station District

Sapyeong

Bongeunsa

Hotel Eonju Seonjeongneung Samseong Jungang Sinnonhyeon Cappuccino Foot Traffic Bongeun Park Bongeunsa Average First Floor Rent by Subdistrict/Location (10 thousand won per Pyeong) Novotel Hotel Main Side(만원/전용평) Ritz Carlton Ambassador Samjung Average Weekly Foot Traffic by Month Source: SEMAS

(Unit: 10 thousand people) Main : 44.8 Main : 107.9 Seonjeongne60ung Coex Side : 27.4 Side : 19.9 46.4 50.3 44.4 44.2 45.5 Gangnam Station 2 42.2 38.5 42.2 42.2 42.5 39.8 Kukkiwon 40 Seoul 35.6 Medical Center Shillastay 31.6 Gangnam Yeoksam Park Yeoksam 20 Hospital Grand Inter- Continental Seoul Gangnam Station1 Seoul metropolitan 0 Hyundai Police Department Parnas Agency 9 10 11 12 1 2 Store 3 Mall4 5 6 7 8 9 2017 2018 Gangnam Note: Each figure represents the amount of visitors per week which isSam theseo weeklyng average for the Yeoksam Seolleung Park Hyatt Seoul Nat’l Seoul Hotel The Bank of Korea month *Each figure is a time series figure which has been announced after the data revision by the Univ. of Education Gangnam Station 4 Gangnam Branch Main : 15.1 Main : 27.9 Small Enterprise Market Service Information System Side : 18.9 Side : 25.9 Foot Traffic Rate by Day Source: SEMAS Gangnam Station 3 (Unit : %) Q2`18 Q3`18 20 16.8 17.9 15.0 13.6 14.7

refers to samples of rental property used to calculate the average rental price in the Q3 2018 / Main property rental samples of rental the average to calculate used to refers 13.4 Source : Naver Real Estate & Daum Properties ■ 10 8.7 Note: Note: / back road to in the district, refers or the side facing central road the Side Street the road to refers Street monthly rent - applied a ratio of deposit to of converted rents Average

Location Gangnamgu Yeoksamdong, Seochogu Seochodong, Shinnonh- Transpor- Gangnam Station (Line 2/Shinbundang Line) 0 yun Station~Gangnam Station~Wooseong APT area tation Shinnonhyun Station (Line 9) Mon Tue Wed Thu Fri Sat Sun Lotte Department Store Foot Traffic Rate by Age Group Source: SEMAS Hanti Resident No of Residents: 7,980 residents / No of Households: 4,170 Major Samsung C&T, Samsung Heavy Industries, MERITZ Insur- (Unit : %) Q2`18 Q3`18 Nambu Bus Terminal companies Population Completion ance, Hyundai Glovis, LIGComp lInsurance,etion etc. Completion Completion Building Name(Koreanhouseholds) / BEmployeesuilding Name : 91,177GFA(3.3㎡) Floor Building Name(Korean) Building Name GFA(3.3㎡) Floor Building Name(Korean) Building Name 40 GFA(3.3㎡) Floor Building Name(Korean) Building Name GFA(3.3㎡) Floor Year Year Year Year 1 성원빌딩 11,475.7 18F/B6F 1992 20 신안빌딩 9,998.5 20F/B7F 1996 39 동훈타워 10,648.8 21F/B7F 2004 58 삼성생명 서초타워 33,474.8 34F/B7F 2007 Seongwon Bldg. Sinan Bldg. Donghun Tower 27.0 24.1 Samsung Life Insurance Seocho Tower 씨티파이낸셜빌딩 21 섬유센터 13,710.1 19F/B4F 1992 40 삼흥오피스텔 7,575.3 18F/B6F 1991 59 강남빌딩 10,951.3 21F/B6F 1995 2 7,314.3 20F/B6F 1994 Fashion Center 18.6Gangnam Bldg. (구 삼성파이낸스빌딩) City Financial Bldg. 22 글라스타워 18,248.8 32F/B8F 1995 41 KAIT타워 20 10,424.3 20F/B7F 1999 60 나라종합금융빌딩 13.4 12.6 9,049.6 22F/B7F 1999 KAIT Tower 3 골든타워 12,245.2 20F/B7F 1995 Glass Tower Nara Banking Corporaton Bldg. Rents Golden Tower 23 오토웨이타워 14,308.0 9F/B5F 2014 42 일옥빌딩 10,452.9 24F/B6F 1997 61 대륭서초타워 8,361.5 20F/B7F 1994 Autoway Tower Ilok Bldg. Daeryung Seocho Tower 4 삼성생명삼성동빌딩 9,271.0 17F/B8F 2010 Dogok Park 4.2 Samsung Life Insurance Samsung-dong Bldg. 24 해암빌딩 12,971.3 17F/B7F 1995 43 아세아타워 14,591.4 16F/B5F 1992 62 한화금융센터서초사옥 10,150.2 20F/B6F 2008 Haeam Bldg. ASEA Tower 5 엔씨타워2 (구 경암빌딩) 8,102.5 19F/B7F 1994 Hanwha Finance Center Seocho Bldg. NC Tower2 25 KT&G 코스모 대치타워 21,558.1 20F/B6F 1998 44 포스코P&S타워(구 포스틸타워) 0 13,097.6 27F/B6F 2003 63 강남POBA빌딩 13,705.5 20F/B6F 2011 KT&G Cosmo Daechi Tower Posco P&S Tower Gangnam POBA Bldg. Average6 엔씨타워 1First Floor Rent in Gangnam9,348. Station4 15F/B7F 2008 District Rents and Vacancy Rate for Gangnamdaero45 캐피탈타워 18,981.110’s 24F/B6F 199820’s 30’s 40’s 50’s Over 60 NC Tower1 26 동일타워 13,249.0 16F/B7F 2012 64 두산건설빌딩 12,061.9 20F/B4F 1987 Dongil Tower Capital Tower Doosan Construction Bldg. 7 트레이드타워 32,649.7 54F/B2F 1989 46 강남파이낸스센터 64,315.8 45F/B8F 2001 Trade Tower 27 현대해상강남타워 10,582.5 19F/B7F 2001 Note: Domestic Foot Traffic only 65 건설회관 15,977.4 20F/B2F 1986 Source : Naver Real Estate & Daum Properties SourceH :I KABGangnam Tower Gangnam Finance Center Daechi Construction AssociHangnyation Bldeog. ul 8 파르나스타워 31,573.0 38F/B8F 2016 (Unit : 10 thousand47 풍림빌딩 Won per Pyeong, %) 12,512.9 20F/B5F 1985 Parnas Tower Poonglim Bldg. 66 강남빌딩 10,951.3 15F/B4F 1995 28 한국지식재산센터(구 삼성역삼빌딩) 14,713.1 20F/B8F 1999 Gangnam Bldg. (Unit : 910 thousand아셈타워 Won per Pyeong) 44,485.6 41F/B4F 2002 KIPS-Korea Intellectual Property Asem Tower 48 삼성화재역삼빌딩 Samsung Fire & Marine Ins● Totalurance number10,557.0 of20F/B6 visitorsF 1996 to the Gangnam마제스타시티 Station 타워1 District in Q3 is similar to the amount14,090. 4 17F/B7F 2017 Yangjae Service Center Q1'18 Q2'18 Q3'18 Dogok MajeStar city Tower1 10 한국도심공항빌딩 14,495.2 26F/B6F 2002 29 한국타이어빌딩 7,530.9 19F/B5F 1992 Yeoksam Bldg. CALT Bldg. 기타 마제스타시티 타워2 10,947.9 17F/B7F 2017 Q1`18 Q2`18 Q3`18 Hankook Tire Bldg. Maebong 49 메리츠타워 17,374.3 30F/B6F 2005 MajeStar city Tower2 150 11 현대산업개발빌딩 7,986.9 15F/B4F 2004 Meritz Tower of visitors last quarter. But during September the numbers decreased due to the Chu- 30 그레이스타워 Medium to Large7,420. 2 20F/B6F 1994 한성청담동 빌딩 6,787.6 16F/B7F 2017 Hyundai Development Engineering Bldg. Grace Tower Hansung Cheongdam-dong Bldg. 12 새마을금고중앙회빌딩 9,067.5 12F/B4F 1994 31 LIG타워 8,013.2 19F/B7F 46.22006 546.10 삼성생 명역삼동빌딩 46.0 Samsung Life Insurance Yeoksam- 9,887.4 20F/B7F 1996 KFCC Bldg.107.9 seok holiday. N1 선릉역 Tower 889 7,025.2 20F/B6F 2017 LIG Tower Stores dong Bldg. Seolleung Tower 889 13 대치동 금강타워 7,506.2 21F/B6F 1999 32 큰길타워 11,050.7 21F/B7F 1993 51 대륭강남타워 9,868.5 20F/B7F 1996 N2 삼성동 142-41외 3필지 10,205.6 27F/B6F 2017 100 Kumkang Tower RentsKeungil Tower Daerung Gangnam Towe●r A complicated commercial district where shopping malls, offices, and private aca- 14 삼성대치2빌딩 7,982.6 19F/B6F 2000 33 SI타워 Small Stores20,026.1 25F/B8F 20.71999 520.62 우덕빌 딩 20.6 7,415.8 18F/B4F 1985 N3 강남N타워 15,464.0 24F/B7F 2018 Samsung Daechi 2 Bldg. SI Tower Wooduck Bldg. Gangnam N Tower 15 동부금융센터 17,248.6 35F/B7F 2002 34 GS타워 42,819.2 38F/B6F 1999 53 랜드마크타워 demic institutions14,476.8 23F/B8 Fare2004 located,N4 this르 네상district스호텔재개 발represents the daily Foot Traffic rate51,694. be-0 37F/B6F 2020 44.8 Dongbu Finance Center GS Tower Landmark Tower Renaissance Hotel redevelopment 50 16 삼성생명대치타워 13,584.7 20F/B6F 1995 35 삼정개발빌딩 Collective Stores8,016.7 20F/B6F 26.61995 526.64 푸르덴 셜타워 26.5 tween 1315,577. and7 22F/B918%F from1998 MondayN5 to삼성동 Saturday. 현대차신사옥마이 Friday스개발 recorded 18% of the daily 20Foot3,975. 8 105F/B6F 2021 27.4S amsung Life Insurance Daechi Tower 27.9 25.9 Samjung Development Bldg. Prudential Tower Samsungdong Hyundaimicedev. H.Q 17 포스코센터 19.9 54,756.8 31F/B6F 1995 36 상록회18.9관 13,530.9 18F/B3F 1991 55 교보강남타워 28,046.9 25F/B8F 2003 N 삼성생명일원동빌딩 23,107.7 9F/B7F 2018 Poosco Center 15.1 Sangnok Bldg. Kyobo Gangnam Tower Traffic between Monday to Sunday, as Friday is in theSams middleung Life Insu rofanc ethe Irwon dweekdayong Bldg. and 18 해성1빌딩 10,628.7 20F/B5F 1990 37 삼성제일빌딩 Medium to Large11,406. 7 20F/B7F 1994 56 GT Tower 16,471.0 24F/B8F 2011 N 청담동 복합시설 12,842.8 16F/B8F 2018 0 Haesung 1 Bldg. Samsung No.1 Bldg. 2.7 2.6 2.6 GT Tower Cheongdamdong Complex 19 해성2빌딩 11,348.4 18F/B6F 1995 38 아남타워 Vacancy Stores 13,335.3 20F/B6F 2000 57 플래티넘타워 the weekend.11,247.6 20F/B7F 1997 N 호반건설 사옥 13,732.0 10F/B4F 2018 Main Street Side Street HaesMainung 2 Street Bldg. Side Street Main Street Side Street Main Street Side Street Anam Tower Platinum Tower Hoban Construction HQ Rate Gangnam 1 Gangnam 2 Gangnam 3 Gangnam 4 Small Stores 0.0 0.0 0.0 ● Compared to other office districts, the Gangnam Station District has the highest pop- Note: Average of converted rents - applied a ratio of deposit to monthly rent, 10:1 - per Gross ulation of people in their 20’s. People in their 30’s also recorded a high visiting ratio. Leasable Area. Different from the quarterly survey samples. Note: Based on Gross Leasable Area

07 Q3 2018 RETAIL MARKET REPORT 02-1 Trends in Major Districts: Gangnam Station District

Retail Types and Sales Analysis

Number of Franchises by Retail Type Total of 1,662 franchises Sales Amount and Number of Uses on Credit Card ● The total number of franchises in the Gangnam Station District was 1,662 in Q3 2018. The number of franchises in the Goods sector decreased due to a lowering amount (Unit : Number of Franchises) Q2`18 Goods Q2`18 F&B (Unit : 10 thousand Won, Uses, Won) of Fashion, Entertainment/Leisure, and Furniture/Home/Decoration establishments. Q3`18 Goods Q3`18 F&B Sales Amount(10 thousand Won) Number of uses Amount Per Use (Won) The franchise number of the F&B sector decreased due to the lowering amount of 350 0 400,000 800,000 1,200,000 1,600,000 Casual Dining and Pubs. Goods F&B Fast Casual 300 44% 56% Pub ● Fast Casual restaurants represented the highest sales amount followed by Pubs and

250 Usual F&B the Usual F&B from the F&B sector. Fashion and Convenience Stores from the Goods Fashion sector have hit high records in sales. 200 Convenience Store ● Following Q2 2018, Convenience Stores and the Usual F&B have increased in sales Casual Dining and the number of franchises. However, Casual Dining and Fashion have lowered in 150 Health/Sports sales and the number of franchises. Because of more competition, Accessories, Cos- Beauty metics, Beauty, Health and Sports have decreased in sales but increased the number 100 Café/Dessert of franchises. Fine Dining 50 Cosmetics ● Unit price for Café/Desserts in Q3 2018 rose from KRW6,064 per unit to KRW6109 per Entertainment/Leisure unit in Q2 2018 but this is a decrease compared to KRW6283 in the Q3 2017. Sales 0 Fast Food

Pub amount on credit card has increased since Q4 2017. There is a sales increase driven by Beauty Fashion Accessories incoming outside residents and work residents into Gangnam Station District. Sales Fast Food Fast Usual F&B Cosmetics Fast Casual Fast Fine Dining Fine Accessories Family Style Family Other Retails Café/Dessert Other Retails Casual Dining Casual Health/Sports of nearby residents decreased compared to the same period of the previous year.

Convenience Store Convenience Furniture/Home/Decoration

Entertainment/Leisure Family Style Furniture/Home/Decoration Major New Tenants : ABC Mart Gangnam Branch ‘Grand Vitality by Retail Type (QoQ Growth Rate) Cafes/Desserts Analysis in Gangnam Station District Stage Gangnam Headquarter’ (Reopened in August 2018) (Unit : 100 million Won) (Unit: 10 thousand Won) Competition Store Growth Rate(%) Growth Sales Amount and Amount Per 30 0.8 60 0.64 0.63 0.66 0.65 0.61 0.61 Use Trend on 0.6 Other Retails 20 50 Credit Card 0.4 10 Amount Per Use 29 23 19 21 22 26 0.2 40 (Right) 0 0 Card Sales Amount Q2 Q3 Q4 Q1 Q2 Q3 30 (Left) 2017 2018 Café/Dessert ● Consists of 3 floors and is re-built in areas where ABC Mart consumers can experience Sales Growth (Unit : %) 20 Fine Dining Rate by Target 30 a new culture and fashion. Fast Casual 18.8 10 Customers 15.2 13.4 14.4 15.7 Health/Sports Family ● The store has a successful reputation when it comes to attracting consumers. For ex- 10 8.5 Style Convenience Stores 5.8 Cosmetics Accessories 0 Usual F&B Sales Volume Growth Rate(%) 0 ample, they host marketing events through collaborations with popular brands. Total Residents Working Non- Fashion Beauty Fast Pub -10 Residents Residents ● The store also has many shopping techniques, such as digital devices that let consum- Entertainment/Leisure-10 Food Furniture/Home/Decoration Casual Dining -30 ers ‘Click and Collect’ to order online and pick up products in the store. They also have a Depression Concentration QoQ -20 ‘KickPick Booth’ where consumers can take pictures with their favorite brand. -20 -10 0 10 20 30 40 YoY -50 -48.2

08 Q3 2018 RETAIL MARKET REPORT 02-1 Trends in Major Districts: Gangnam Station District

Consumer Analysis

Sales Rate by Age Group Sales Rate by Age Group/Income Level ● In Q3 2018, sales to consumers under 20 increased by 3.4%, reaching 46.3% when compared to sales in Q2 2018. Sales to consumers in their 30’s are at 27.6%, a 2.5% Q4`17 Q1`18 Q2`18 Q3`18 (Unit : million Won) (Unit : %) Unit % decrease from Q2 2018. Other age groups have sales similar to Q2 2018. Income Level (%p)

● Consumers younger than 20, that earn less than KRW 30 million in a year, have in- 50 More than 70 46.3 creased by 37.7%. This is a 3.2% difference from the previous quarter. Consumers in their 30’s, that earn less than KRW 70 million in a year, have slightly decreased on all 40 50 ~ 70 2.9 income levels. ( 0.3) ▼

● Sales by external inflows increased slightly from the previous quarter but sales nearby 30 27.6 30 ~ 50 11.1 residents and workers in Seochogu and Gangnamgu, Seoul, have decreased. ( 0.9) ▼ 20 ● The sales of Fast casual, Usual F&B, and Pubs increased in all target groups. However, 12.7 12.6 Fashion decreased when compared to the previous quarter. Below 30 37.7 9.4 ( 1.2) 10 ( 3.2) ▼ ▲ 4.0

0 Age Under 30 30’s 40’s 50’s Over 60 20’s 30’s 40’s 50’s 60’s

Sales Rate by Major Target Consumer Top 10 Major Retail Types by Target Customer (Based on sales rate)

(Unit : %) Total Residents Working Residents Non-Residents

25 22.2

20 19.9% 24.4% 63.8% ( 0.1%p) ( 1.4%p) ( 1.1%p) ▼ ▲ ▲ 15 12.6 12.0 10.7 10 7.8 Nearby Nearby Worker 6.2 Resident Population Population inflows 5.5 4.8 Population from outside 4.3 5 3.4

0 Fast Casual Usual F&B Pub Fashion Convenience Store Health/Sports Casual Dining Beauty Café/Dessert Cosmetics Note: Place of work and residential addresses under Seochogu and Gangnamgu, Seoul. Workers Note: ‘Total’ means sales portion of total sales, including all target customer groups. This target customer analysis can be different from the ‘Total’ Sales Rate by Retail Type which is sourced from the ‘total’ and residents can be duplicated sales of credit cards by retail type as the target customer analysis is sourced from customer data with addresses.

09 Q3 2018 RETAIL MARKET REPORT Verfassungsgericht Gyeongbokgung Changdeokgung Palace Palace

Gyeongbokgung Anguk

Sajik Park

Somerset Seoul Metropotitan Central Palace Seoul Police Agency Government Jongmyo Complex National Shrine Museum of Korean Contemporary Insa-dong Street Ministry of Foreign Jogyesa of Culture Aﬀairs and Trade History (MOFAT) United States Jongno-gu Embassy Jongno3-ga Sejong Cultural Oﬃce Arts Center Dongdaemun Gwanghwamun Seonggwak Park Square

Mapo-gu Gyeonghuigung Palace Gwanghwamun Topgol Park Four Seasons Seoul D Gran Museum Hotel Seoul Tower Seoul Jongno5-ga Dongdaemun of History Jongno3-ga Seoul Jonggak ngno Museum Jo of Art Bosingak Jong-gak Street of Youth

Cheo - TrendsKoreana in MajorSFC Districts:nggy Myeongdong District J02eong-dong 2 Hotel ech Park Best Western eon New Seoul Hotel

Signature Tower

Lotte City Hotel Myeongdong Euljiro3-ga Foot Traffic DDP 세부권역Average First·입지별 Floor 1층 Rent 평균 by Subdistrict/Location임대료 (만원/평) (10 thousandEulji wonro1 per-ga Pyeong) Main Side(만원/전용평) Euljiro 4-ga Deoksugung Average Weekly Foot Traffic by Month Source: SEMAS Seodaemon Palace (Unit: 10 thousand people) Lotte Hotel 15 Lotte Depart 10.6 11.2 Dongdaemun History & Seoul 9.8 10.0 9.7 9.7 10.2 ment Store 8.8 8.0 8.5 8.7 8.7 Culture Park City Hall Seoul Plaza Hotel 10 Metropolitan Main : 43.9 Annex Lotte Council Ibis Ambassador 5 Avenuel 7.0 Myeongdong Seoul Central Myeongdong 0 City Hall City Hall Lotte Young Plaza 9 10 11 12 1 2 3 4 5 6 7 8 9 Annex Myeongdong Cathedral 2017 2018 Embassy of Other Main : - Note: Each figure represents the amount of visitors per week which is the weekly average for the the People’s month *Each figure is a time series figure which has been announced after the data revision by the Bank of Korea Republic of Myeongdong Side : 51.9 China M Plaza Small Enterprise Market Service Information System

Foot Traffic Rate by Day Source: SEMAS Lotte Hotel Sejong Hotel L7 Myeong -dong (Unit : %) Q2`18 Q3`18 20 Chungmuro ro 16.2 16.5 egye 14.7 14.7 o 13.7 13.7 T price in the Q3 2018 / Main property rental samples of rental the average to calculate used to refers Korcham Source : Naver Real Estate & Daum Properties - Myeong-dong ■ 10.5 Ramada Hotel & Bldg. 10 Grand Ambas- Suites Seoul Note: / back road to in the district, refers or the side facing central road the Side Street the road to refers Street monthly rent - applied a ratio of deposit to of converted rents Average sador Hotel Namdaemun Nam-Location Junggu Myeongdong 1, 2Ga, Euljiro2Ga, Chungmuro1, 2Ga, Seo- Transportation Myeongdong Station (Line 4), Euljiro1ga Station (Line 2) 0 daemun daemunro2Ga area Mon Tue Wed Thu Fri Sat Sun Major Kookmin Bank, IBK Industrial Bank, KEB Hana Bank, Daishin Source: SEMAS Chungjeongno Hoehyeon companies Securities, Shinhan Card etc Foot Traffic Rate by Age Group Resident No of Residents: 709 residents / No of Households: 346 house- (Unit : %) Dongguk Univ. Tmark Commercial Lotte Department , Shinsegae Department Q2`18 Q3`18 Population holds / EmployeesGrand Hotel: 37,183 40 Complexes

21.6 20.5 18.1 17.6 18.4 Rents 20 3.8 Average First Floor Rent in Myeongdong District Rents and Vacancy Rate for Myeongdong 0 Seoul 10’s 20’s 30’s 40’s 50’s Over 60 Note: Domestic Foot Traffic only Station Source : Naver Real Estate & Daum Properties Source : KAB (Unit : 10 thousand Won per Pyeong, %) Seoul (Unit : 10 thousand Won per Pyeong) Square Q1'18 Q2'18 Q3'18 ● Despite a slight decrease due to heat waves, the foot traffic has increased since Q2 Millennium Q1`18 Q2`18 Q3`18 Seoul150 hilton Hotel Medium to Large 2018. The number of foreign tourists increased in September. 89.4 89.8 89.8 Shilla Hotel Stores ● The foot traffic rate is evenly represented between 14 and 17% from Monday to Sat- Yaksu 100 Rents Small Stores 79.6 79.6 79.6 urday. The foot traffic rate on Sundays is 10%, showing that deviations on weekdays 51.9 43.9 and weekends are not large compared to other major districts. 50 Collective Stores - - - ● People aged 30~60 account for a high proportion of the foot traffic. Medium to Large 0 Vacancy StoresNamsan Mountain6.4 6.4 6.4 Main Street Side Street Main Street Rate Other Myeongdong Central Myeongdong Small Stores 0.0 0.0 0.0 Note: Average of converted rents - applied a ratio of deposit to monthly rent, 10:1 - per Gross Leasable Area. Different from the quarterly survey samples. Note: Based on Gross Leasable Area

Four Points By Sheraton Seoul Namsan 10 Q3 2018Ho RETAILtel MARKET REPORT 0 100 200 300 400m 02-2 Trends in Major Districts: Myeongdong District

Retail Types and Sales Analysis

Number of Franchises by Retail Type Total of 998 franchises Sales Amount and Number of Uses on Credit Card ● The number of franchises for Fashion and Fast Casual decreased while Entertainment/ Leisure, Casual Dining, Usual F&B and other Café related retails increased to 998 in Q3 (Unit : Number of Franchises) Q2`18 Goods Q2`18 F&B (Unit : 10 thousand Won, Uses, Won) 2018. Q3`18 Goods Q3`18 F&B Sales Amount(10 thousand Won) Number of uses Amount Per Use (Won) 200 0 200,000 400,000 600,000 800,000 ● Fashion, which has the most sales, has a decrease in sales and the number of fran-

Goods F&B Fashion chises when compared to Q2 2018. 56% 44% Fast Casual ● The amount of sales and franchise numbers of ‘Café/Dessert’ continue to grow, follow- 150 Health/Sports ing Q2 2018. Usual F&B, Casual Dining and Entertainment/Leisure have grown in Q3 Cosmetics 2018. On the other hand, other retails and Pubs decrease while Convenience Stores, Usual F&B Beauty, and Fast Casual stay the same. 100 Casual Dining Beauty ● The sales of credit cards and Unit Pricing in Entertainment/Leisure in the Myeongdong Accessories District increased by 29.5%. A 7.7% increase to KRW 27,744 when compared to Q2 2018. Looking at the timeframe, increased a little, but credit card sales between 2pm 50 Convenience Store Café/Dessert and 5pm increased a lot compared to Q2 2018. Entertainment/Leisure Fast Food 0 Pub Pub Beauty

Fashion Fine Dining Fast Food Fast Usual F&B Cosmetics Fast Casual Fast Fine Dining Fine Accessories Family Style Family Other Retails Café/Dessert Family Style Casual Dining Casual Health/Sports Major New Tenants : VIPS Myeongdong Central

Convenience Store Convenience Other Retails

Entertainment/Leisure Branch ‘VIPS&BEER BITE’ (Opened in July 2018) Furniture/Home/Decoration Furniture/Home/Decoration

Vitality by Retail Type (QoQ Growth Rate) Entertainment/Leisure Analysis in Myeongdong District (Unit : 100 million Won) (Unit: 10 thousand Won) Competition Store Growth Rate(%) Growth Sales Amount and Amount Per Use 10 4.0 80 Trend 2.8 Furniture/Home/Decoration 2.6 2.6 on Credit Card 60 5 2.6 2.9 2.0 Amount Per Use (Right) 40 7.7 7.4 5.4 5.4 7.0 Card Sales Amount 0 0.0 Casual Dining Café/Dessert (Left) Q3 Q4 Q1 Q2 Q3 20 Entertainment/Leisure 2017 2018 ● VIPS Myeongdong Central Branch has newly opened as “VIPS&BEER BITE”. Health/Sports Usual F&B

Fine Dining Family Style ● Beauty Fast Food Credit Card Sales (Unit : 100 million Won) This is a store where customers can enjoy various handmade beer with the VIPS Salad Cosmetics 0 Sales Volume Growth Rate(%) Family Fast Casual Amount by Time 3.0 Bar. Specialized in the commercial district of Myeongdong, the store targets office Pub Fashion Style Convenience Store Period -20 2.0 workers and college students in their 20’s and 30’s. 09-11 am ● The store introduced a “tap station” that allows customers to drink as much beer as -40 1.0 Other Retails 12-1 pm they like, using a tap band provided at the entrance. 0.0 Depression -60 Concentration 2-5 pm Q3 Q4 Q1 Q2 Q3 -80 -60 -40 -20 0 20 40 6-11 pm 2017 2018

11 Q3 2018 RETAIL MARKET REPORT 02-2 Trends in Major Districts: Myeongdong District

Consumer Analysis

Sales Rate by Age Group Sales Rate by Age Group/Income Level ● In Q3 2018 sales from people under 20 increased by 1.5%, reaching 37.0%. While sales from people in their 30’s decreased. Q4`17 Q1`18 Q2`18 Q3`18 (Unit : million Won) (Unit : %) Unit % ● Consumers under the age of 30 that earn less than KRW 50 million in a year show a Income Level (%p) decrease in sales. Consumers under the age of 20 that earn less than KRW 30 million 40 More than 70 4.0 37.0 ( 0.2) ▲ increased by 1.5%, reaching 31.5%. This is where the most sales are recorded.

● Sales by external inflows recorded at 77.4% which is a big proportion. When compared 30 50 ~ 70 5.3 27.6 to other target consumers, the external inflows show a high consumption in Fashion, Cosmetics and Accessories.

20 30 ~ 50 4.2 10.0 6.1 4.0 ● Sales in Health/Sports in Q3 increased a little but Cosmetics decreased due to the 17.3 ( 0.6) ▼ ( 0.1) ▲ nearby worker population. The nearby worker population mostly consumed in the 11.2 31.5 Food and Beverage category (Fast Casual and Usual F&B). The external inflows showed 10 Below 30 14.1 7.0 ( 1.5) ( 1.1) ▲ ▼ consumptions in Fashion and Cosmetics when compared to other target consumers.

0 Age Under 30 30’s 40’s 50’s Over 60 20’s 30’s 40’s 50’s 60’s

Sales Rate by Major Target Consumer Top 10 Major Retail Types by Target Customer (Based on sales rate)

(Unit : %) Total Residents Working Residents Non-Residents 30

25 22.4 20.3 20 4.2% 20.0% 77.4% ( 0.7%p) ( 0.3%p) ( 0.9%p) ▲ ▲ ▼ 15 11.4 9.9 10 8.1 Nearby Nearby Worker Resident Population Population inflows 5.9 Population from outside 4.9 4.2 5 3.7 3.4

0 Fast Casual Fashion Usual F&B Health/Sports Cosmetics Casual Dining Beauty Convenience Store Café/Dessert Accessories Note: Place of work and residential addresses under Junggu, Seoul. Workers and residents can Note: ‘Total’ means sales portion of total sales, including all target customer groups. This target customer analysis can be different from the ‘Total’ Sales Rate by Retail Types which is sourced from the ‘total’ be duplicated sales of credit cards by retail types as the target customer analysis is sourced from customer data with addresses.

12 Q3 2018 RETAIL MARKET REPORT Verfassungsgericht Gyeongbokgung Changdeokgung Palace Palace

Gyeongbokgung Anguk

Sajik Park

Somerset Trends in MajorCentral Districts: Gwanghwamun/CBD District 02-3 Palace Seoul Government Jongmyo Complex Shrine National Museum of Korean Ministry of Foreign Jogyesa Contemporary Aﬀairs and Trade History (MOFAT) United States Foot Traffic Embassy Jongno3-ga Average First Floor Rent by Subdistrict/LocationSejong Cultural (10 thousand won per Pyeong) Main : 46.3 Main Side(만원/전용평) Arts Center Side : 27.0 Source: SEMAS Dongdaemun Gwanghwamun Average Weekly Foot Traffic by Month Seonggwak Park Square Mapo-gu (Unit: 10 thousand people) Gyeonghuigung Palace 30 Gwanghwamun Topgol Park Four Seasons Gwanghwamun 19.5 19.5 18.2 18.1 Seoul 17.8 17.7 18.3 17.4 Hotel Seoul 20 15.6 15.1 16.0 16.0 Museum D Tower Gran Seoul Jongno5-ga Dongdaemun of History 10 12.9 Seoul Main : - Jongno3-ga Museum Jonggak Side : 30.1 of Art 0 9 10 11 12 1 2 3 4 5 6 7 8 9 2017 2018 Cheo Koreana SFC nggy Note: Each figure represents the amount of visitors per week which is the weekly average for the Jeong-dong ech Hotel eon Park month *Each figure is a time series figure which has been announced after the data revision by the Seoul Best Western Small Enterprise Market Service Information System Metropolitan New Seoul Hotel Council Annex Euljiro British Embassy Seoul Lotte City Foot Traffic Rate by Day Source: SEMAS Cathedral Hotel Myeongdong Anglican Church of Seoul Center 1 Korea City Hall (Unit : %) Q2`18 Q3`18 DDP 20 Euljiro 4-ga Deoksugung Seoul Plaza 16.5 18.8 18.8 Palace Euljiro3-ga 16.3 Seodaemon price in the Q3 2018 / Main property rental samples of rental the average to calculate used to refers 15.6 Source : Naver Real Estate & Daum Properties Euljiro1-ga ■ Lotte Hotel Note: Note: / back road to in the district, refers or the side facing central road the Side Street the road to refers Street monthly rent - applied a ratio of deposit to of converted rents Average 10 Hwangudan Lotte Depart 8.2 Dongdaemun History & Seoul ment Store 5.8 City Hall Seoul Plaza Hotel Culture Park Location Jongrogu ShinmunroAnn e1ga,x Dangjudong,Metropolitan Naesudong, JeokseonWestin- Chosun Transportation Gwanghwamun (Line 5), Jonggak Station (Line 1), Euljiro Lotte Council Hotel 0 Avenuel dong, Susongdong, Jongro 1ga, Cheongjindong area 1ga Station (Line 2) Mon Tue Wed Thu Fri Sat Sun Seoul City Hall City Hall Lotte Young PMajorlaza Annex Noon Square Kyobo Life Insurance, MDaewooyeongdong E&C, Heungkuk Life Insur- Cathedral Source: SEMAS Resident No of Residents: 1,227 residents / No of Households: 741 households companies Foot Traffic Rate by Age Group Embassy of ance, Daelim, Standard Chartered Bank Korea, etc Population / Employees: 115,859 the People’s (Unit : %) Q2`18 Q3`18 Bank of Korea CommercialRepublic of Lotte Department, Noon Square M Plaza ComplexesChina 40 24.5 23.7 17.4 Rents 20 16.5 15.0 Chungmuroyero Toeg 2.9 Average First Floor Rent in Gwanghwamun/CBDKorcham District Rents and Vacancy RateMyeong-dong for Gwanghwamun 0 Ramada Hotel & Bldg. 10’s 20’s 30’s Gra40’snd Ambas- 50’s Over 60 Source : Naver Real EstateSuite &s SeoDaumul Properties Source : KAB (Unit : 10 thousand Won per Pyeong, %) sador Hotel Namdaemun Note: Domestic Foot Traffic only (Unit : 10 thousand Won per Pyeong) Nam- daemun Q1'18 Q2'18 Q3'18 Q1`18 Q2`18 Q3`18 ● Due to the effects of the summer heat wave and the Chuseok holiday in Septem- 60 Chungjeongno Hoehyeon Medium to Large ber, the foot traffic has shown a gradual decline since Q2 2018. 46.3 Stores 22.8 23.0 23.1 Dongguk Univ. 40 Tmark ● The foot traffic numbers during the weekday are 2 times lager than that of the Gra30.1nd Hotel Rents Small Stores 21.9 22.1 22.1 27.0 weekend and when compared to Q2 2018, the sales during the weekend has de- 20 Collective Stores - - - clined.

Medium to Large ● The proportion by different ages remained similar to that of Q2 2018 and the pro- 0 Vacancy Stores 1.1 1.1 2.0 Main Street Side Street Main Street portion for 30’s and 40’s has grown high. Seoul Gwanghwamun Euljiro Rate Station Small Stores 2.2 0.0 0.0 Note: Average of converted rents - applied a ratioSeo oful deposit to monthly rent, 10:1 - per Gross Square Leasable Area. Different from the quarterly survey samples.Millenniu m Note: Based on Gross Leasable Area Seoul hilton Hotel Shilla Hotel Yaksu 13 Q3 2018 RETAIL MARKET REPORT

Namsan Mountain

Four Points By Sheraton Seoul Namsan Hotel 0 100 200 300 400m 02-3 Trends in Major Districts: Gwanghwamun/CBD District

Retail Types and Sales Analysis

Number of Franchises by Retail Type Total of 901 franchises Sales Amount and Number of Uses on Credit Card ● The number of franchises for Café/Dessert, Fast Food and Entertainment/Leisure increased while the number of Usual F&B decreased which has many numbers in Food (Unit : Number of Franchises) Q2`18 Goods Q2`18 F&B (Unit : 10 thousand Won, Uses, Won) and Beverage in the Gwanghwamun District. Various Food and Beverages such as Fast Q3`18 Goods Q3`18 F&B Sales Amount(10 thousand Won) Number of uses Amount Per Use (Won) Casual, Casual Dinning, Usual F&B, Fine Dining and others have the top 1 to 4 credit 300 Goods 0 200,000 400,000 600,000 800,000 1,000,000 26% card sales. Fast Casual 250 F&B ● There is an increase in Entertainment/Leisure, Fast Food, Accessories and Café/Des- 74% Casual Dining Usual F&B sert. There is a decrease in Convenience Store, Fashion, Beauty, Usual F&B and Casual 200 Fine Dining Dining. Furniture/Home/Decoration ● Sales and the unit price of Fast Food in Gwanghwamun/CBD District have slowly 150 Café/Dessert grown. All the target customers have shown more than a 20% increase in sales growth Pub when compared to Q2 2018. Compared to Q2 2017, the credit card sales for the near- 100 Convenience Store by resident population was recorded at the highest at 122.6%. Fashion

50 Health/Sports Beauty Fast Food 0 Accessories Pub Beauty

Fashion Cosmetics Fast Food Fast Usual F&B Cosmetics Fast Casual Fast Fine Dining Fine Accessories Family Style Family Other Retails Café/Dessert Entertainment/Leisure Casual Dining Casual Health/Sports

Convenience Store Convenience Other Retails Major New Tenants :

Entertainment/Leisure Family Style

Furniture/Home/Decoration ‘The Booth’ Gwanghwamun Branch (Opened in July 2018)

Vitality by Retail Type (QoQ Growth Rate) Fast Food Analysis in Gwanghwamun/CBD District (Unit : 100 million Won) (Unit: 10 thousand Won) Competition Store Growth Rate(%) Growth Sales Amount 60 and Amount Per Use 4.0 0.88 0.95 1.0 Fast Food Trend 0.72 0.80 50 3.0 0.67 on Credit Card 2.0 0.5 40 Amount Per Use 1.0 (Right) 1.9 1.7 1.8 2.8 3.6 30 Card Sales Amount 0.0 0.0 (Left) Q3 Q4 Q1 Q2 Q3 ● “The Booth”, which attracts attention as a unique handmade beer establishment, 20 Café/Dessert 2017 2018 Entertainment/Leisure opened a new craft beer pub in Gwanghwamun. 10 Credit Card Sales (Unit : %) Other Retails Fast Casual Accessories Amount by Time 150 ● Located in front of Cheonggye Plaza in Gwanghwamun, the old underground park- Fine Dining 0 Health/Sports Period 122.6 Usual F&B Casual Dining Sales Volume ing lot space was renovated with a New-Retro concept to show characteristic space Cosmetics Growth Rate(%) 100 84.3 Fashion Beauty-10 Convenience 81.2 73.5 Store ● They built new things, such as arcade games, play stations, video art, graffiti, DJ booths, Pub 50 -20 23.5 28.2 24.3 23.3 booth riding club and pop-up stores to attract office workers. Furniture/Home/Decoration YoY Depression -30 Concentration 0 QoQ -50 0 50 100 150 Total Residents Working Non- Residents Residents

14 Q3 2018 RETAIL MARKET REPORT 02-3 Trends in Major Districts: Gwanghwamun/CBD District

Consumer Analysis

Sales Rate by Age Group Sales Rate by Age Group/Income Level ● Sales for people under the age of 20 have continued to rise since Q4 2017, reaching 13.8%. Sales for people in their 40’s decreased a little to 27.5% when compared to Q2 Q4`17 Q1`18 Q2`18 Q3`18 (Unit : million Won) (Unit : %) Unit % 2018. Sales for people in their 60’s increased a little. Income Level (%p)

● Consumers under the age of 20 that earn less than KRW 30 million in a year and 40 More than 70 5.3 5.5 ( 3.0) ( 1.3) ▼ ▼ people in their 40’s, 50’s and 60’s who earn between KRW 30~50 million show a large increase in sales. On the other hand, people in their 40’s that earn more than KRW 70 30.2 30 27.5 50 ~ 70 3.1 8.6 million show a large decrease in sales. ( 1.6) ( 1.5) ▼ ▼

● Sales for the population inflows from outside increased to 60.1% when compared 20 18.8 30 ~ 50 11.8 10.7 7.0 7.2 to Q2 2018. Sales for the nearby worker population consequently decreased 37.1%. ( 1.8) ( 1.6) ( 1.6) ( 2.2) ▼ ▲ ▲ ▲ 13.8 ● The focused sales rate by the nearby worker popualation from Fast Casual, Usual F&B, 9.6 Convenience Store, and Café/Dessert have continued in Q3 2018. 10 Below 30 13.6 2.3 ( 2.7) ( 0.5) ▲ ▲

0 Age Under 30 30’s 40’s 50’s Over 60 20’s 30’s 40’s 50’s 60’s

Sales Rate by Major Target Consumer Top 10 Major Retails by Target Customer (Based on sales rate)

(Unit : %) Total Residents Working Residents Non-Residents 35

30 27.7

25 63% 37.1% 60.1% ( 0.2%p) ( 1.0%p) ( 0.9%p) ▲ ▼ ▲ 20 16.8

10.4 Nearby Nearby Worker 10 Resident Population Population inflows 6.2 Population from outside 5.3 4.2 5 3.8 3.7 3.2 1.7

0 Fast Casual Usual F&B Casual Dining Convenience Store Café/Dessert Fine Dining Pub Fashion Health/Sports Beauty Note: Place of work and residential addresses under Junggu, and Jongrogu Seoul. Workers and Note: ‘Total’ means sales portion of total sales, including all target customer groups. This target customer analysis can be different from the ‘Total’ Sales Rate by Retail Types which is sourced from the ‘total’ residents can be duplicated sales of credit cards by retail types as the target customer analysis is sourced from customer data with addresses.

15 Q3 2018 RETAIL MARKET REPORT Daeheung Sangsu Gwangheungchang

Lotte city Hotel

Gongdeok Harrington Shilla Stay Square Hotel Mapo

Samgea o Park r Best Western Premier e Seoul Garden Hotel

daMapo o Boksakkot Park Bamseom ap e M g id r B

gang eo - Trends in Major Districts:S Yeouido District 02 4 ge Han River Park Yeouido rid po B Ma

National Assembly Building National Assembly Foot Traffic Average First FloorLibrary Rent by Subdistrict/Location (10 thousand won per Pyeong) Main Side Average Weekly Foot Traffic by Month Source: SEMAS

National Assembly Members West Yeouido (Unit: 10 thousand people) Oﬃce Building Main : 17.7 Han River Side : 16.6 40 Korea Electric 30.6 29.5 28.1 National 25.5 25.7 26.8 28.5 27.4 27.6 26.8 Assembly Power Corporation 30 24.2 22.5 ge Yeouinaru rid 20 21.8 Yeouido Park o B nhy 10 Parc1 Wo IFC Mall Conrad Parc1 0 Hotel Hotel Han River Park 9 10 11 12 1 2 3 4 5 6 7 8 9 KBS IFC Mall IFC 2017 2018 MBC Note: Each figure represents the amount of visitors per week which is the weekly average for the Financial Supervisory month *Each figure is a time series figure which has been announced after the data revision by the Service KRX Main : 13.8 East Yeouido Small Enterprise Market Service Information System Side : 14.6

FKI Yeouido Marriott Executive Foot Traffic e Rate by Day Source: SEMAS Apartment Seoul g rid B (Unit : %) ay Q2`18 Q3`18 ilw 20 ra 16.8 17.3 63 Bldg. price in the Q3 2018 / Main property rental samples of rental the average to calculate used to refers Source : Naver Real Estate & Daum Properties ■ 14.2 15.1 15.8 Hangang 11.1

KBS annex Note: / back road to in the district, refers or the side facing central road the Side Street the road to refers Street monthly rent - applied a ratio of deposit to of converted rents Average Indonesia 9.6 Embassy 10 Saetgang Park Location Yeongdeungpogu Yeouidodong Transportation Yeouido Station (Line5/9), Saetgang Station (Line9)

Singil Saetgang 0 Mon Tue Wed Thu Fri Sat Sun Resident No of Residents: 7,446 residents / No of Residents: 3,321 households Major KRX, Woori Investment&Securities, Hanwha General Insur- Population companies / Employees: 160,132 ance, Mirae Asset Life Insurance, KBS, ABL Life Insurance, etc Foot Traffic Rate by Age Group Source: SEMAS

Commercial IFC Mall, Park One (Scheduled) (Unit : %) Q2`18 Q3`18 Complexes 40 Nodeul Noryangjin Daebang 24.5 22.6 Rents 18.0 20 15.4 16.5 Average First Floor Rent in Yeouido District Rents for Yeouido(Gongdeok Station, Yeongdeungpo) 3.1 0 Source : Naver Real Estate & Daum Properties Source : KAB (Unit : 10 thousand Won per Pyeong, %) 10’s 20’s 30’s 40’s 50’s Over 60 (Unit : 10 thousand Won per Pyeong) Note: Domestic Foot Traffic only Q1'18 Q2'18 Q3'18 Q1`18 Q2`18 Q3`18 20 17.7 Collective ● Yeouido is one of the representative office districts in Seoul. The foot traffic did not 16.6 Yeouido 20.7 20.6 20.5 Stores 15 13.8 14.6 decrease despite the summer heat wave in Q3 2018. This is because of the influx of Medium to 13.7 13.8 13.8 tourists that visit the night market events. 10 Gongdeok Large Stores Station ● The weekday foot traffic rate is 15~16% while the weekend foot traffic rate is lower Small Stores 14.1 14.1 14.1 5 at 10~11%. This is a normal office feature characteristic in which the foot traffic is Medium to 0 12.9 13.0 13.0 stronger on the weekdays. Main Street Side Street Main Street Side Street Yeongdeungpo Large Stores ● People in their 30’s and more make up most of the foot traffic. West Yeouido East Yeouido Small Stores 10.8 10.6 10.7 Note: Average of converted rents - applied a ratio of deposit to monthly rent, 10:1 - per Gross Note: Based on Gross Leasable Area / Rents for Yeouido District Is only provided as collective Leasable Area. Different from the quarterly survey samples. stores and Vacancy rate is not provided.

16 Q3 2018 RETAIL MARKET REPORT 02-4 Trends in Major Districts: Yeouido District

Retail Types and Sales Analysis

Number of Franchises by Retail Type Total of 1,675 franchises Sales Amount and Number of Uses on Credit Card ● The Yeouido District has a large number of Food and Beverage that show a growth in the number of franchises for Fast Food and Café/Dessert while showing a decline for (Unit : Number of Franchises) Q2`18 Goods Q2`18 F&B (Unit : 10 thousand Won, Uses, Won) Usual F&B and other Food and Beverages. Among the Goods, there were no decrease Q3`18 Goods Q3`18 F&B Sales Amount(10 thousand Won) Number of uses Amount Per Use (Won) 500 Goods 0 400,000 800,000 1,200,000 1,600,000 or other changes in the number of franchises except for Health/Sports. 23% Fast Casual ● Fast Food and Café/Dessert were on the rise while other Food and Beverages includ- F&B ing Usual F&B and Casual Dining and Fashion, Furniture/Home/Decoration and other 400 77% Casual Dining Usual F&B retail show declined in both sales and the number of franchises. The number of fran- Fine Dining chises for Convenience Stores, Cosmetics and Entertainment/Leisure decreased but 300 Pub sales increased. Convenience Store ● The credit card sales for Entertainment/Leisure in the Yeouido District increased by Cosmetics 200 11.4% QoQ and 12.3% YoY. Café/Dessert

Fashion ● The unit price in Q3 2018 is 23,563 KRW per unit. Sales between 2pm~5pm increased 100 Furniture/Home/Decoration when compared to Q2 2018, but is similar the amount in Q3 2017. On the other hand, Beauty credit card sales after 6pm (which is after office hours) increased by 14.8% QoQ and Health/Sports 24.9% YoY. 0 Entertainment/Leisure Pub Beauty

Fashion Fast Food Fast Food Fast Usual F&B Cosmetics Fast Casual Fast Fine Dining Fine Accessories Family Style Family Family Style Other Retails Café/Dessert Casual Dining Casual Health/Sports Convenience Store Convenience Other Retails Major New Tenants : Entertainment/Leisure Accessories Furniture/Home/Decoration IFC Mall L'Occitane Concept store (Opened in July 2018) Vitality by Retail Type (QoQ Growth Rate) Entertainment/Leisure Analysis in Yeouido District (Unit : 100 million Won) (Unit: 10 thousand Won) Competition Store Growth Rate(%) Growth Sales Amount and Amount Per Use 10 2.6 3.0 2.5 2.4 2.4 25 Trend 2.3 Fast Food 20 on Credit Card 2.0 Café/Dessert 5 15 Amount Per Use 1.0 Health/Sports (Right) 8.2 8.1 7.3 8.3 9.3 10 Card Sales Amount 0 0.0 (Left) Q3 Q4 Q1 Q2 Q3 2017 2018 5 Credit Card Sales (Unit : 100 million Won) ● The French brand ‘L’Occitane’ opened a new concept flagship store in the IFC Mall in Accessories 0 Fast Casual Beauty Family Style Fashion Amount by Time 4 Yeouido, Seoul for local customers. Casual Dining Period Sales Volume Fine Dining Cosmetics 2.9 3.0 2.9 2.9 Pub Usual F&B 2.5 2.6 ● Growth Rate(%) -5 2.3 2.2 2.2 2.3 Re-designed as an opened concept store stylized by the Southern Province in Convenience Entertainment/Leisure 2 France, anyone can easily drop by. Furniture/Home/Decoration Store 09-11 am -10 12-1 pm ● Customers are offered to try all the products and are provided with hair and scalp Other Retails 0 Depression -15 Concentration 2-5 pm Q3 Q4 Q1 Q2 Q3 consulting. -30 -20 -10 0 10 20 30 After 6 pm 2017 2018

17 Q3 2018 RETAIL MARKET REPORT 02-4 Trends in Major Districts: Yeouido District

Consumer Analysis

Sales Rate by Age Group Sales Rate by Age Group/Income Level ● Sales for people in their 50’s that earn more than 50 million KRW in a year increased. Sales for people under 20 decreased a little. Q4`17 Q1`18 Q2`18 Q3`18 (Unit : million Won) (Unit : %) Unit % ● Sales of the population inflows in Q3 2018 decreased to 57.7%. However, the sales Income Level (%p) proportion of nearby resident and worker populations increased. 40 More than 70 6.9 1.7 ( 0.3) ( 0.4) ▼ ▲ ● Due to a large decrease in sales of the nearby worker population, overall sales in 31.9 the Fashion show lowered in rank. Fast Casual is recorded at 1st place in the ranks 30 50 ~ 70 8.5 5.4 ( 0.2) ( 0.3) due to a slight increase in sales from three different types of consumers: Nearby 24.4 ▼ ▲ residents, workers, and population inflows. 20 30 ~ 50 14.6 15.5 16.2 12.0 10 Below 30 12.6 10.8 ( 0.5) ( 0.2) ▲ ▼

0 Age Under 30 30’s 40’s 50’s Over 60 20’s 30’s 40’s 50’s 60’s

Sales Rate by Major Target Consumer Top 10 Major Retails by Target Customer (Based on sales rate)

(Unit : %) Total Residents Working Residents Non-Residents 25

21.1

16.6 15.0% 33.3% 57.7% ( 0.8%p) 15 ( 0.5%p) ( 0.2%p) ▼ ▲ ▲ 11.7

10 7.6 Nearby Nearby Worker 6.3 5.7 5.7 5.4 Resident Population Population inflows 4.7 Population from outside 5 4.3

0 Fast Casual Usual F&B Casual Dining Convenience Store Cosmetics Pub Fashion Fine Dining Café/Dessert Furniture/Home/ Decoration Note: Place of work and residential addresses under Yeongdeungpogu Seoul. Workers and Note: ‘Total’ means sales portion of total sales, including all target customer groups. This target customer analysis can be different from the ‘Total’ Sales Rate by Retail Types which is sourced from the ‘total’ residents can be duplicated sales of credit cards by retail types as the target customer analysis is sourced from customer data with addresses.

18 Q3 2018 RETAIL MARKET REPORT 02-5 Trends in Major Districts: Hongdae/Hapjeong District

Foot Traffic Average First Floor Rent by Subdistrict/Location (10 thousand won per Pyeong) Main Side Average Weekly Foot Traffic by Month Source: SEMAS

(Unit: 10 thousand people)

60 42.0 39.3 39.2 37.0 36.3 40.2 38.7 37.8 39.2 38.0 40 33.8 36.8 32.1 20 Main : 10.1 Hapjeong Hongdae Main : 31.5 0 Side : 8.9 Side : 16.1 9 10 11 12 1 2 3 4 5 6 7 8 9 2017 2018 Note: Each figure represents the amount of visitors per week which is the weekly average for the month *Each figure is a time series figure which has been announced after the data revision by the Small Enterprise Market Service Information System

Foot Traffic Rate by Day Source: SEMAS

Sangsu·Hapjeong Main : 21.3 (Unit : %) Q2`18 Q3`18 Side : 16.3 20 15.3 16.6 15.7 refers to samples of rental property used to calculate the average rental price in the Q3 2018 / Main property rental samples of rental the average to calculate used to refers 14.0 14.2 Source : Naver Real Estate & Daum Properties ■ 12.9 11.4

Note: Note: / back road to in the district, refers or the side facing central road the Side Street the road to refers Street monthly rent - applied a ratio of deposit to of converted rents Average 10

Location Seogyodong and Donggyodong in Mapogu,Hongdaeyipgu Transportation Hongdaeyipgu Station, Hapjeong Station(Line2) /Hapjeong 0 Station~Sangsu Station~Hapjeong Station area Station, Sangsu Station (Line6) Mon Tue Wed Thu Fri Sat Sun

Foot Traffic Rate by Age Group Source: SEMAS Resident No of Residents: 12,017 residents / No of Households: 6,688 house- Major DB Insurance, Good People, Seah Holding, Aekyung Population holds / Employees : 47,552 companies IFC Mall, Park One (Scheduled) (Unit : %) Q2`18 Q3`18 40 Commercial Y’Z Park, Mecena Polis , Delight Square 27.6 Complexes 21.2 Rents 20 17.0 14.2 14.1 5.9 Average First Floor Rent in Hongdae·Hapjeong District Rents and Vacancy Rate for Hongdae·Hapjeong 0 10’s 20’s 30’s 40’s 50’s Over 60 Source : Naver Real Estate & Daum Properties Source : KAB (Unit : 10 thousand Won per Pyeong, %) Note: Domestic Foot Traffic only (Unit : 10 thousand Won per Pyeong)

Q1'18 Q2'18 Q3'18 ● The foot traffic in the Hongdae/Hapjeong District, which grew into the largest retail Q1`18 Q2`18 Q3`18 40 Medium to Large area in Gangbuk, remained at the same level as Q2 2018, despite the heatwave and Stores 22.7 22.6 22.6 30 24.2 Chuseok holidays. Rents Small Stores 20.8 20.0 20.0 ● This district is a highly demanded entertainment/tourist spot for young people and 20 17.2 15.8 17.3 11.4 8.7 Collective Stores shows the most evenly distributed proportion of foot traffic both weekdays and 10 11.7 11.5 11.5 Medium to Large weekends compared to other major districts. 0 8.3 6.5 5.8 Main Street Side Street Main Street Side Street Main Street Side Street Vacancy Stores ● Universities are located in this district and therefore the foot traffic for people in their Rate Sangsu·Hapjeong Hapjeong Hongdae Small Stores 8.9 17.2 17.2 20’s is high. This district is a young district where the foot traffic for teens is reasonably Note: Average of converted rents - applied a ratio of deposit to monthly rent, 10:1 - per Gross higher than the other major districts. Leasable Area. Different from the quarterly survey samples. Note: Based on Gross Leasable Area

19 Q3 2018 RETAIL MARKET REPORT 02-5 Trends in Major Districts: Hongdae/Hapjeong District

Retail Types and Sales Analysis

Number of Franchises by Retail Type Total of 1,675 franchises Sales Amount and Number of Uses on Credit Card ● A number of franchises for Goods Sales (Fashion, Accessories and Cosmetics) decreased in Q2 2018 while a number of Food and Beverages (Usual F&B, Casual Dining, (Unit : Number of Franchises) Q2`18 Goods Q2`18 F&B (Unit : 10 thousand Won, Uses, Won) Fine Dining and Pubs) decreased in Q3 2018. Q3`18 Goods Q3`18 F&B Sales Amount(10 thousand Won) Number of uses Amount Per Use (Won) 700 0 400,000 800,000 1,200,000 1,600,000 2,000,000 ● Family Style and Café/Dessert increased by 20% in sales and a number of franchises. Goods F&B Fast Casual Usual F&B, Casual Dining, Fine Dining and Fast Food declined in sales whereas Fash- 600 41% 59% Fashion ion, Accessories, Health/Sports, Furniture/Home/Decoration has more competition. 500 Usual F&B Entertainment/Leisure declined in the number of franchises but increased in sales.s Pub ● The sales and unit price of Fashion in the Hongdae/Hapjeong District decreased 400 Casual Dining slightly compared to Q2 2018 but when compared to Q3 2017, the sales and unit Convenience Store price decreased by 15.5% and 5.8%. In case of credit card sales by gender, females 300 Entertainment/Leisure represented 69.6% which was two times higher than males. But for the unit price, Other Retails males represented 40.135 KRW per unit which was 1.4 times higher than females 200 Beauty which represented KRW 27.684 per unit. Health/Sports 100 Café/Dessert Accessories 0 Cosmetics Pub Beauty

Fashion Fast Food Major New Tenants : AK Plaza Hongdae Branch Fast Food Fast Usual F&B Cosmetics Fast Casual Fast Fine Dining Fine Accessories Family Style Family Other Retails Café/Dessert Fine Dining Casual Dining Casual Health/Sports ‘AK & Hongdae’ (Opened in August 2018)

Convenience Store Convenience Family Style

Entertainment/Leisure Furniture/Home/Decoration Furniture/Home/Decoration

Vitality by Retail Type (QoQ Growth Rate) Fashion Analysis in Hongdae·Hapjeong District (Unit : 100 million Won) (Unit: 10 thousand Won) Competition Store Growth Rate(%) Growth Sales Amount and Amount Per Use 150 6 25 5.0 Trend 4.5 4.1 4.0 Family Style 3.8 20 on Credit Card 100 4

Café/Dessert ● AK&Hongdae is a local friendly neighborhood shopping center which provides 15 Amount Per Use 50 2 (Right) 92.9 114.4 90.4 109.7 107.3 specialized services for nearby residents in the district. Card Sales Amount 0 0 st th 10 (Left) 3Q 4Q 1Q 2Q 3Q ● Located from the 1 to 5 floor at AK Plaza, Hongdaeyipgu Station, the shopping 2017 2018 center is 13,659m² (About 4,132Pyeong) big. F&B stores are mainly located on the 5 (Unit :Won) (Unit : %) st th Accessories Health/Sports Fashion Credit Card Sales 1 and 5 floor and the life style zone includes the Fashion and Beauty area which is Furniture/Home/Decoration Fast Casual Other Retails 0 Rate and Unit nd th 50,000 80 located from the 2 floor to 4 floor. Usual F&B Beauty Convenience Sales Volume Price by Gender 40,135 40,000 Cosmetics -5 Store Growth Rate(%) 60 ● The shopping center is targeted towards people aged 10~20’s who are familiar Casual Dining Pub Entertainment/Leisure 30,000 27,684 40 with the Hongdae District. Families in their 20’s~40’s use Yeonnamdong and the -10 Fast Food 20,000 Amount Per Use 20 forest trail of the Gyeongui Line and foreign tourists use the airport railway. A total Fine Dining (Right) 10,000 Depression Concentration 30.4 69.6 of 52 brands are part of the shopping center and many of the brands are located at -15 Card Sales Amount 0 0 -30 -20 -10 0 10 20 30 (Left) Male Female the Hongdae District.

20 Q3 2018 RETAIL MARKET REPORT 02-5 Trends in Major Districts: Hongdae/Hapjeong District

Consumer Analysis

Sales Rate by Age Group Sales Rate by Age Group/Income Level ● Sales by ages in Q3 2018 show a similar pattern to Q2 2018. Out of the total sales, people in their 30’s that earn less than KRW 50 million decreased by 1.2%. Q4`17 Q1`18 Q2`18 Q3`18 (Unit : million Won) (Unit : %) Unit % ● Sales from major target consumers remained steady when compared to Q2 2018. Income Level (%p) However, population inflows reached increased a little at 78% which was very high 60 More than 70 2.4 ( 0.2) 53.7 ▲ among the population inflows of the five major districts. 50 ● Sales of Usual F&B and Casual Dining decreased a little when compared to the overall 50 ~ 70 target customers. Fast Casual increased a little. The sales that are based on other 40 retails and address groups didn’t show a large change when compared to Q2 2018.

30 30 ~ 50 6.4 8.9 4.8 ( 0.3) ( 0.5) 23.0 ▼ ▼ 20 Below 30 11.7 11.9 45.4 ( 0.2) ( 0.7) 10 8.0 ▲ ▼ 3.3 0 Age Under 30 30’s 40’s 50’s Over 60 20’s 30’s 40’s 50’s 60’s

Sales Rate by Major Target Consumer Top 10 Major Retails by Target Customer (Based on sales rate)

(%) Total Residents Working Residents Non-Residents 25 22.5

15.3% 10.9% 78.0% 14.4 ( 0.2%p) ( 0.5%p) ( 0.7%p) 15 ▼ ▼ ▲ 13.0 11.8

Nearby Nearby Worker 5.7 5.7 Resident Population Population inflows 4.9 Population from outside 4.1 4.0 5 3.2

0 Fast Casual Fashion Usual F&B Pub Casual Dining Convenience Store Entertainment/ Beauty Other Retails Health/Sports Leisure Note: Place of work and residential addresses under Mapogu, Seoul. Workers and residents can Note: ‘Total’ means sales portion of total sales, including all target customer groups. This target customer analysis can be different from the ‘Total’ Sales Rate by Retail Types which is sourced from the ‘total’ be duplicated sales of credit cards by retail types as the target customer analysis is sourced from customer data with addresses.

21 Q3 2018 RETAIL MARKET REPORT 02 Summary: Trends in Major Districts

While the number of valid franchises increased a little in Food and Beverage, Food and Beverage and Entertainment/Leisure including Café/Desert, Family Style and Fast Food show noticeable growth in the number of valid franchises.

Q2-Q3 2018 Growth Rate for Number of Valid Franchise by Q2-Q3 2018 Growth Rate for Number of Franchise Q2-Q3 2018 Sales Growth Rate by Retail Type Major District by Retail Type (Sum of 5 Major Districts) (Sum of 5 Major Districts)

(Unit : %) Goods F&B (Unit : %) Goods F&B -15 -10 -5 0 5 10 15 20 -15 -10 -5 0 5 10 15 4 3.5 Café/Dessert 20.1% Café/Dessert 12.7% Family Style 8.3% Supermarkets, Hypermarkets, etc. Other Retails 12.2% 3 2.6 Health/Sports 6.3% Family Style 11.0% Fast Food 4.1% Gym, Leisure Stores, Bicycles, Golf, Swimming Entertainment/ 8.3% 2 Leisure Accessories 3.1% Pools, etc. Fast Food 4.4% Fast Casual 0.1% Convenience 3.7% 1 0.6 Movie Theater/Play Theater, Book Store, Karaoke, Store 0.1 0.2 -0.1% Beauty Fast Casual 2.9% Internet Café, etc. 0 -1.0% Fine Dining Beauty 2.8% -0.2 -1.0% Usual F&B Restaurants per use is exceed KRW20,000 and below Pub 0.2% -1 -1.1% Cosmetics Usual F&B 0.2% -1.0 -1.0 KRW50,000 -1.5% Fashion -0.3% Fine Dining -2 -1.8 -2.2% Convenience Store -2.6% Health/Sports -3.1% Casual Dining -3.6% Casual Dining -3 -2.9 -3.1% Entertainment/Leisure -4.4% Furniture/Home/Decoration -4 -3.2% Pub -7.3% Cosmetics Gangnam Myeong Gwanghwa- Yeouido Hongdae/ -3.7% Furniture/Home/Decoration -10.8% Fashion Station dong mun/CBD Hapjeong -10.0% Other Retails -13.3% Accessories Total Sales Amount and Number of Uses of Credit Card by Major District Q2-Q3 2018 Sales Ratio Change by Target Customer

Total amounts(Left) Total uses(Right) Cost per use (1000 Won) Q1`18 Q2`18 Q3`18 (Unit : 100 million Won) (Unit : 10 thousand uses) (Unit : %)

19.9 30.3 23.0 28.3 20.8 80 Sales in crease in Sales increase in Sales increase 78.0 800 ( 1.1) ( 3.3) (-) ( 0.5) ( 0.6) 400 Sales in crease Sales increase in ▼ ▼ ▼ ▼ Entertainment/ Entertainment/ in Café/ Entertainment/ 70 in F&B Café/ Leisure Leisure 57.7 Dessert, 700 350 Dessert 63.8 Leisure 77.4 60.1 Family Style 60 Sales decrease Sales decrease in 600 300 in Fashion, Cosmetics/Sales 50 Beauty, Fine increase in Health 500 250 Dinging Sports 40 37.1 400 200 33.3 30 300 150 24.1 20.0 19.9 20 200 100 15.0 15.3 10.9 10 6.3 100 50 4.2 0 0 0 Residents Working Non- Residents Working Non- Residents Working Non- Residents Working Non- Residents Working Non- Gangnam Station Myeong- Gwanghwa- Yeouido Hongdae/ Residents Residents Residents Residents Residents Residents Residents Residents Residents Residents dong mun/CBD Hapjeong Gangnam Station Myeongdong Gwanghwamun/CBD Yeouido Hongdae/Hapjeong

22 Q3 2018 RETAIL MARKET REPORT RETAIL TRENDS AND ISSUES

03. Retail Trends and Issues 24

RETAIL MARKET REPORT 03 Retail Trends and Issues

Retail, space to fill your needs

In recent years, the status of retail facilities in office districts that have been regarded as office support facilities in the past, has changed dramatically. Retail awareness has increased to be known as a popular place. Activated by office district itself, retail facilities have become the main strategy of office buildings. However, the size and conditions of retail facilities owned by each office building are all different. There will be more offices that cannot be solved by applying the value formula through retail. This has become a hot topic these days. This report takes a look at what improves retail facilities in office buildings which have become landmarks in the office districts. This report also examines what can be improved in retail facilities in the prospect of needs of office workers who are the main target for in the office district. What can retail give to modern office workers who need to warm up before starting the day because of the commute to work, what can be provided for lunch, and what can be offered for dinner?

Target Diversification: Becoming a full fledged retail facility

● Retail facilities in the general office district basically target office workers in the nearby area. Therefore the ● As the scale of the facility grows, new strategies must be taken. SFC Mall has developed into a high-end dining retail facilities are full of people on weekdays, especially before and after lunch. But it is not as crowded on space and has kept the luxurious concept of the entire retail facility by strictly selecting which brand stores the weekends. In order to overcome these limitations and improve the facilities, some cases with a large retail are allowed into the mall. Considering SFC Mall is a newly remodeled asset, “replace Gwanghwamun” has an facility size label themselves as “independent retail facilities” and not “retail facilities that are located in the lower floor innovative idea to combine all the stages into one concept. For example, the design, construction and opera- of office buildings”. tion of interior and exterior of the building have been mixed and applied from the planning stage (the brand concept) to the construction stage target (design and operations).

Seoul Finance Center (SFC) was acquired by GIC in 2000 and has become the first large-scale retail facility in an Located on the 1st~5th floor of Gwanghwamun D Tower, “replace Gwanghwamun has been known as a suc- office building. The building was a luxury hotel and has changed into an office building. The basement was cre- cessful example of the development of low rise office facilities. Although the “replace Gwanghwamun” project is ated as a Class A arcade where formal business dinners are possible. Since then, various cafes have been opening part of the facility, it was designed as a separate space with a space brand called “replace”. CEO JOH Soo Young up in the basement. There are good “high-end life style” stores for office workers that include the following: wom- participated as the general director who was responsible for planning, designing, MD and other duties. The plan- en and men’s clothing, glasses and premium flower shops. Using red bricks with low lighting, the atmosphere of ning stage now gives important insights on the development of the complex facilities. “replace Gwanghwamun” the building has improved. This has led to the increased staying time of customers at the building. wanted to take the demand from not only office workers in Gwanghwamun, but also tourists visiting Cheong- gye stream that are looking for “Trendy food and beverage facilities”. The waterfall escalator and open terrace is well-liked by consumers. “Replace Gwanghwamun” is also known for having Uniqlo, a large SPA clothing brand. (Photo: JOH & Company)

24 Q3 2018 RETAIL MARKET REPORT 03 Retail Trends and Issues

Diversification of the Menu : The Food Court’s Hot Evolution More Needs? Restaurants and Cafés are not enough!

● Recently, “Select Dining” has become a hot trend. It is the most important facility for companies that have their ● Generally, coffee shops and restaurants are thought as retail facilities for office workers. Thus, retail facilities in own office buildings. Options that “Select Dining” provides includes distinctive restaurants and cafes which the office district lacks variety. Recently, lunch menus have been diversified for office workers with the addition have been viral to consumers through word of mouth and because of social media. This is not the average of the Select Dining Facility in the office district. But, this isn’t enough to satisfy the needs of office workers. restaurant experience. Simply eating and having coffee is not enough for office workers. Sometimes office workers have a light lunch to rest for a while, do some errands or take a short walk. Not all office workers spend their break time eating or having coffee. Some recreational facilities are needed.

Select Dining brands have increased. Here are few examples of the Select Dining brands: “Over the Dish” planned by OTD Corporation, “Power Plant” tenanted at District Y (SK Security building in Yeouido), M (Daishin Finance) What would the office workers who use launch time more than “meal time” do? Some office workers have a light and C (Booyoung Eulji building), Sikgaekchon (Booyoung Taepyeonro building, Gran Seoul, City Plaza Yeouido) lunch and take care of their health at nearby gyms. Others study foreign languages while eating sandwiches. themed by Cartoon “Sikgaek” written and illustrated by Huh Young Man. Furthermore, “the Blvd440” at Posco There are office workers who gather with nearby other office workers from the same industry from known social Center Gangnam which includes Young Poong Book Store and select dining together, “Seoullo Terrace(Daewoo network services for self development. There are office workers who like to relax by reading books at book stores, Fund Building)” and “Amore Square(Amore Pacific Office building)” which gather at hot places in Garosugil, Itae- taking a short nap and enjoying recreational activities during their lunch time. A movie theater at Yeouido oper- won and Seorae Village and a few others. (Photos: OTD Cooperation, Sikgaekchon, Biz Chosun, Seoullo Terrace) ates movie screens with recliner chairs as a sleeping room titled as “Siesta”. Beverages and sleeping masks are provided for 90 minutes at the price of one movie show. Screen baseball, VR game rooms, retro games, and coin karaoke are also popular among office workers who want to relieve stress by taking advantage of the short lunch time. (Photos : ChosunPub, The Korean Economic Daily, Joongang Ilbo Joins)

● Food and beverage is the industry that profits the most. As mentioned above, the needs of office vary accord- ing to their health. Times have changed, and many office workers prefer to relax and do other activities rather than simply eating and having coffee.

25 Q3 2018 RETAIL MARKET REPORT 03 Retail Trends and Issues

1 A Need for Spending Time Alone 2 A Need for New Shopping Moments

● Eating alone (Honbap) has become a trend along with the word “Sohwakhaeng”, which is a shortened word that means “small but certain happiness”. This trend has been influenced by the increase in one-person households as well as an increasing number of office workers who need a little time alone after a long day of work. Many office workers want to have “Honbap” and “Sohwakhaeng” during their lunch break. There aren’t many places to do this. It is easy to meet someone you know at a restaurant near your work, which can possibly turn into an awkward experience.

“CJ Olive Market” opened at the headquarters of Ssanglimdong, CJ CheilJedang, and at the IFC Mall in Yeouido. It provides a wide range of dine-out menus using the Home Meal Replacement (HMR) developed by the profes- “Honbap” seems to be a trend that appears in the big cities of the world and not only Korea. Posts that introduce sional chefs of CJ. Customers can dine in or order take out in the forms of boxed lunches or salads. Customers good restaurants to dine alone can easily be found on Google when searching “Solo Dining”. Recently there are can eat lunch and purchase the chef recommended HMR food for dinner after work. This is very convenient and more restaurants installing “Bar-styled” seats. But most of the restaurants have single that are faced towards the a great choice for office workers. (Photos : Weekly DongA) wall, utilizing unused space. It is worth mentioning how one customer can be seated at the restaurant without having an awkward moment but enjoys his own meal via oversea cases of “Good restaurants for solo dining” (Photos : The Japan Times, Eater London, The Infatuation)

Eenmaal restaurant, designed by a Dutchman in 2013, is an experimental pop-up restaurant created as part of a No need to go to a department store or a shopping mall for shopping. No need to go to a particular store in project to break the limits of loneliness in society. As an experimental restaurant, customers are recommended the alleyway. Customers simply shop at the “pop up store” located at the corners of office building lobby. Lately, to read books or magazines instead of playing with their Smartphone while having a three-course meal. Cus- the pop-up store business has been a great marketing strategy to target office workers in their 30’s and 40’s. tomers usually use their phone during their meal to avoid the awkwardness of eating alone. The restaurant has Apparel, miscellaneous goods, lunch boxes, as well as internationally popular snack brands, are now entering received favorable reviews from domestic and foreign media as it is possible to enjoy your “meal alone” without the domestic market. This is providing more opportunities for office workers to purchase more things. (Photos : using your Smartphone. The seats are arranged in different directions. (Photos : Eenmaal, Food 2.0 LAB) Now Times, Sweet Spot)

26 Q3 2018 RETAIL MARKET REPORT 03 Retail Trends and Issues

3 A Gift for a Loved One 4 Rentable Spaces

● The demand for additional space for tenants will be resolved in the form of retail. Shibuya Hikarie is a high-rise complex consisting of commercial-business facilities built in the former Tokyo Culture Hall site and the sur- rounding area redeveloped as part of the urban regeneration project near Shibuya Station. This building has enterprise tenants concentrated in Shibuya including IT, Art, and Content companies such as LINE. The musical theater and conference hall are located in the middle floors which are located between commercial and office facilities. One floor below was provided in response to the demand by nearby office tenants.

Have you ever bought flowers for yourself? Snow Fox, a lunch company, opened four flower shops (snow fox flower) in Teheranro and Gangro last year. Customers can purchase flowers at this shop as a self-gift or as a gift for a loved one. This shop also sells small packaged affordable bouquets, pots and cactus. The number of office workers stopping by during their lunch break is increasing. Located on the 1st floor of Jongro Tower in Jong- gak Station, “Witch Garden” is a multi-shop where flower shops, cafés, nail shops, and cosmetic shops are put together. Customers can also purchase small packaged affordable flowers and pots. Also, it sells a set of flowers Creative Lounge MOV, which is located on the 8th floor of Shibuya Hikarie, is a membership lounge for individu- on that day that comes with a drink on a first come first serve basis.(Photos : Snow Fox Flower) als or companies run by the Japanese furniture company “Kokuyo-Furniture”. This lounge has 4 types of facilities: “Open Lounge” - sofas and tables in an open space, “Meeting Room” -multiple furniture, “24 hour operated Residence Area” - shared table with lockers and a booth seat for 1-2 people, and “Showcase –aijima” - multi lease space which can be used as workshop/exhibition space/exchange space and other events. Shibuya Hikarie has concentrated on cultural space to maintain the keyword “culture” represented by the site philosophy. This keyword has been applied to the working ethic of resident tenants. Shibuya Hikarie is remark- able because it solved the exhibition, work, and meeting space needs of tenants in the form of a membership work lounge. (Photos : Creative Lounge MOV)

There are gift items that are somewhat burdensome for oneself to purchase for himself, but are highly satisfied if received from others. Japanese chocolate brand “ROYCE” and Belgium chocolate brand Godiva located at the 1st floor in replace Gwanghwamun are popular among customers looking for “relatively affordable” price with “relatively presentable” gifts. “Task Officina”, a business-class gift shop in SFC mall and AMOREPACIFIC building, is a good place to find gifts that business workers like. In addition, customers can buy own stationery items that have a classical design in the modern age that is full of technological advancements. (Photos : ROYCE)

27 Q3 2018 RETAIL MARKET REPORT 03 Retail Trends and Issues

● Cases that need space can also be found in Korea. Co-working space for fashion industry workers has opened in Dongdaemun’s Fashion Town, Korea’s largest fashion district. The co-working space provides business space ● This report has studied various trends regarding the direction that retail facilities are head- for fashion designers, shopping mall owners, fashion brand companies, photographers, media creators and ed in. Menus at retail restaurants and targets visiting retail facilities have been diversified. other fashion industry workers. Taking a closer look at the facilities here, the co-working space provides a vari- There is an increasing number of sophisticated select dining facilities that provide lunch ety of space and service needed for many businesses. and dinner options. As for large scale facilities, target customers (other than office workers) are able to actively use the retail facilities in the evening and on weekends. This report also includes a case that plans to increase its visiting time in commercial environment by enhancing the interior design and MD.

● “Sohwakhaeng(small but certain happiness)”, “Gasimbi(pursuit of satisfaction rather than decent price)” and other trends related to customer satisfaction increase business outside of the office for many office workers. This report provides a list of the needs of office workers working in retail facilities of office districts. - Need for spending time alone: In case of F&B, single-seats for customers are provided. “Musinsa Studio” is located on four different floors (2,200 pyeong). Musinsa Studio has been the foundation for Helps make customers enjoy a non-awkward lunch time without feeling the need to use many fashion start-up companies. Therefore, this studio has been set up in a way to help beginning start-up their phone. Resting cafés, sleeping cafés, public lounges, and areas to relax are also be- businesses. coming quite popular. - Need for shopping : Multipurpose space or unused space can be used in the form of a This studio provide the space and service needed for fashion businesses. For example, the following facilities are pop-up store. Meal kits/HMR food is readily accessible and provided for the convenience provided: offices, meeting rooms, lounges, work rooms, a showroom, a pattern press room, a studio, storage, a of workers after they finish work. packing room, photography service area (charged) and other fashion work related services. The photography - Need for small gift : Small packages that contain flowers and pots are provided at “rela- studio has a lot of external renting enquires but it is strictly used as an exclusive facility for the tenants. tively affordable” prices with “relatively presentable” gifts on a daily basis.

- Need for space itself : Retail concept of renting/sharing space (lounge, showroom and meeting room). This satisfies the demand for individuals who need additional work space. This isn’t just a place to make money. It is a place that provides facilities for marketing to take place. A lot of support such as business platform and business incubation program is provided.

● The boundaries between office and retail are becoming smaller. Offices are being built in retail facilities. Retail facilities are not only places to work, but also provide establishments where office workers can relax and enjoy their free time. Needs are being met and competition will become fierce to meet the needs of consumers.

28 RETAIL MARKET REPORT 2018. Q3 04 Research Outline & Company Introduction

29 Q3 2018 RETAIL MARKET REPORT