Marketing costs weighed on profit, pushing the platform into an operating loss
New CEO Lee Ji-eun is betting on fashion expertise and brand curation
Chung Yong-jin, chairman of Shinsegae Group.
[Insight Korea = Kim Ji-ho]
W Concept Korea, the fashion platform that Shinsegae Group Chairman Chung Yong-jin brought under E-Mart, is moving to redefine its identity as a women’s platform. The company posted its first annual operating loss since being folded into E-Mart.
This year, W Concept appears determined to find a path to recovery by focusing on its original role as a women’s fashion platform. The task falls to Chief Executive Lee Ji-eun, who is regarded as a fashion expert.
According to the Financial Supervisory Service’s electronic disclosure system on May 11, W Concept recorded consolidated revenue of 119.4 billion won and an operating loss of 3.1 billion won last year. Revenue rose 2.1 percent from a year earlier, but operating profit fell by 4.7 billion won. It was the first loss since E-Mart acquired W Concept through SSG.com in May 2021.
Signs of weakening profitability had appeared as early as 2023. W Concept generated operating profit in the 3 billion won range in both 2021 and 2022, but in 2023, operating profit fell to just 5.8 million won.
The swing to a loss last year was affected by higher marketing expenses. W Concept expanded activities to raise brand awareness, including operating pop-up stores in Seongsu-dong and hiring models. In the process, advertising and sales promotion expenses rose by about 10 billion won from a year earlier.
W Concept began in 2008 as a platform for domestic designer brands and established itself in the women’s fashion market. SSG.com, a subsidiary of E-Mart, acquired 100 percent of W Concept in 2021 for 265 billion won.
At the time, W Concept’s transaction volume was 330 billion won, ahead of 29CM’s 275 billion won. But last year, 29CM’s transaction volume grew to 1.3 trillion won, roughly twice that of W Concept. Since the acquisition, W Concept’s cumulative operating profit has remained at about 22.8 billion won, increasing the urgency of restoring profitability.
Lee Ji-eun Takes Over, Betting on Fashion Fundamentals
Amid slowing profitability and intensifying competition, W Concept is looking for a turnaround through a leadership change. In March, the company appointed Executive Director Lee Ji-eun as its new chief executive. Ms. Lee is a product and brand specialist who previously served as head of design at LF, creative director overseeing the men’s division, and head of the CN division at Kolon Industries FnC. She joined W Concept last year as executive director in charge of the second product division, overseeing activewear, athleisure, the private brand Frontrow and imported brands.
Her appointment aligns with Mr. Chung’s emphasis on strengthening core business competitiveness. W Concept’s core strength lies less in price competition and more in its understanding of fashion products and ability to curate brands. Appointing someone with deeper knowledge of fashion products and brands than a typical e-commerce specialist is seen as a move to restore the platform’s original competitiveness.
Under Ms. Lee, W Concept is strengthening its ability to discover fashion products and curate brands. The strategy is to differentiate itself through product and brand understanding rather than price competition.
Since Ms. Lee took office, W Concept has begun redefining its platform identity. A key example is last month’s mobile app renewal, which placed brand lookbooks and in-house editorial shoots at the forefront. The move is intended to strengthen W Concept’s identity as a curation platform for women’s designer brands by emphasizing brand sensibility and content. The company also revamped its gifting service to improve customer convenience.
The marketing organization has also been adjusted. After the leadership change, W Concept created a design lab within its marketing organization. The team-level unit is responsible for strengthening platform design and content competitiveness. The company is also expanding “W Exclusive,” an exclusive product planning strategy it has operated since its early days. Under W Exclusive, W Concept collaborates with brands on its platform to introduce exclusive products.
“This year, we plan to focus on strengthening the fundamental competitiveness of fashion,” a W Concept official said. “We will enhance competitiveness across products and app services and establish a virtuous cycle in which both brands and the platform grow together.”
- This article was translated by ChatGPT. (이 기사는 챗GPT가 번역했습니다.)
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