[비즈한국] ‘Hanstyle,’ considered a first-generation luxury multi-brand shop, has decided to terminate its business. Hanstyle, which has suffered from losses for the past several years, entered emergency management while pursuing restructuring, but has decided to shut down operations as the financial downturn persisted. There is talk in the industry that with the luxury platform bubble bursting, there are quite a few companies in precarious financial situations.
“Even Hanstyle…” Industry in shock
On the 1st, Hanstyle notified its members regarding the end of service. The announcement stated that the Hanstyle online mall would close on August 30, and following a sequential shutdown of services, business would officially terminate within October. According to the notice provided by Hanstyle, product deliveries will cease on September 4, and customer support and member services will be cleared by October 4.
Hanstyle is a domestic 1st-generation luxury multi-brand shop that opened in 2001. It drew attention by being the first to introduce brands such as the French designer brand 'Isabel Marant' and handmade sneakers 'Golden Goose' to the domestic market. It exclusively launched brands like JW Anderson and MSGM in Korea, and based on its long-standing history, it also operates 15 offline stores in Hyundai Department Store069960, Lotte Department Store, and Shinsegae004170 Department Store.
The industry shock is particularly severe because the company had significantly expanded its business over the past few years. Starting in 2022, Hanstyle provided a 'dawn arrival' service allowing customers to quickly receive overseas direct purchase goods. It was a service that allowed customers to receive products before 7 a.m. the next day if ordered by 11 p.m. Last year, it also expanded its categories by bringing in a large number of domestic fashion brands.
A Hanstyle customer, 'A', said, “I was surprised to receive the email. Hanstyle is known for handling authentic goods you can trust, even among luxury platforms. The fact that even Hanstyle is closing down makes me realize how dire the situation is for offline and online malls.”
Bizhankook reached out to the company multiple times for comment regarding the termination of the business, but did not receive a response.
Word has been circulating in the industry that Hanstyle’s management difficulties had been intensifying recently. An industry official said, “Since last year, Hanstyle noticeably expanded its discount events. There were frequent sales with incomprehensible high discount rates, and they cleared out inventory that had been sitting for over 5 years through these discount events,” adding, “I believe this was part of the process of winding down the business.”
Re-Han, the company that operates Hanstyle, had been reducing its number of employees through restructuring since last year. The number of Re-Han employees enrolled in the National Pension Service was maintained at around 200 in the first half of last year, but now it is only around 20. It is estimated that about 130 employees left the company between May 2023 and the end of the year.
Losses also continued. Re-Han, which had recorded a profit of 10.2 billion won as recently as 2016, saw its operating profit drop to 900 million won in 2019, and the scale of its losses widened starting in 2020. It recorded operating losses of 7.8 billion won in 2020 and 5.7 billion won in 2021. In 2022, the deficit expanded to 19.1 billion won, and last year’s operating loss was calculated at 17.4 billion won.
There is talk in the industry that the sense of crisis in the luxury market has heightened to the point where even the long-standing Hanstyle is shutting down. An industry official said, “It is not just a problem for Hanstyle. The overall market atmosphere is not good, so there is deep concern,” and another official added, “I know of a few other places besides Hanstyle that are in precarious management situations.”
Growth of luxury platforms stalled, hit by the TMON-WeMakePrice crisis
The luxury platform industry continues to face a harsh winter. In March, Catch Fashion became controversial after abruptly halting its services due to worsening financial difficulties. MustIt implemented voluntary retirement for all employees early this year, and sold its Seoul Gangnam headquarters building last year, which it had purchased only two years prior.
Last year, the revenue of the three major domestic luxury platforms dropped significantly compared to the previous year. Trenbe’s revenue last year was 40.1 billion won, down about 55% from the year prior, with an operating loss of 3.2 billion won. Balaan also saw its revenue drop 56% to 39.2 billion won compared to the previous year and recorded an operating loss of 9.9 billion won. MustIt’s revenue was 24.98 billion won, down 25% from the year before, and it recorded an operating loss of 7.8 billion won. It is not just the domestic market; the global market sentiment is also stagnant. The British luxury platform MatchesFashion entered court receivership in March due to worsening financial difficulties and stopped site operations last month.
Kim Dae-jong, a professor of business administration at Sejong University, said, “Even in China, which is considered the world’s largest luxury consumption market, luxury companies are experiencing great difficulties. Luxury consumption is heavily influenced by the economic situation, and with the economy in a slump, luxury consumption is bound to remain sluggish.”
The industry seems to be pinning its hopes on a performance rebound in the second half of the year. An industry official said, “As the fashion industry in general usually has higher revenue in the second half than the first, we expect that the performance which faltered in the first half will rise in the second half.”
There are forecasts that the move away from platforms will continue for the time being as anxiety over using fashion platforms has grown among consumers due to the recent TMON-WeMakePrice (TMep) crisis. It is expected that as consumers prefer safe transaction methods, they will focus on transactions through official websites rather than open markets or fashion platforms.
Seemingly conscious of this, the three major luxury platforms are rushing to emphasize safe transactions. Balaan announced plans to launch a settlement agency service in the second half of this year that it has been developing with a Payment Gateway (PG) company since the end of last year. Trenbe is preparing to introduce escrow (depositing payments with a third party) following the TMep crisis. MustIt also mentioned settlement payment stability, stating that it "possesses the best financial soundness in the same industry."
Professor Kim Dae-jong predicted, “Consumers have come to consider platform reliability as important following the TMep crisis. There will be a concentration phenomenon toward platforms that can give consumers confidence, and companies that cannot do so may see a sharp drop in consumer usage rates.”