Diversification into Korean Style

Within the next 5 years, Hang Ten can consider bringing the H&T sub-brand they currently have in Korea to Singapore as their second growth strategy following the previous implementation of their product extensions. Considering the fact that Hang Ten’s core competency is based on an understanding of “the Asian style”, we believe that introducing H&T to the Singapore market can help Hang Ten capture a broader market and consequently, increase its revenue. Moreover, Hang Ten can also leverage on their existing facilities and capabilities since they can import these new products from Korea without the need of additional manufacturing facilities.

Mode of Entry

The introduction of H&T as a sub-brand is chosen to reduce the transference of Hang Ten’s currently unfavorable brand image to H&T while allowing Hang Ten to partially gain from H&T’s trendier image and popularity among Korean (and, potentially, local) youths.

In entering the Singapore market, H&T should come in force by opening a concept store in a prominent location to signal that it is not simply another fashion label. Given the perceived similarity between its brand and H&M’s, it is even more important that H&T establishes itself strongly during its initial entry to avoid being perceived as a knock-off of the renowned fashion chain. Its launch can be timed to coincide with the performance of a popular Korean artist in Singapore, or even feature a fan-meet by the artistes themselves.

While this is expected to incur sizeable costs, Hang Ten Group Holding’s recently-doubled operating profits are undoubtedly able to cover this. Considering higher potential returns from a new market penetration as compared to further expanding Singapore’s faltering Hang Ten brand, this may in fact be a more prudent alternative.

H&T brand analysis

Target Market : Fashionable, young (18-25 years old) individuals that are knowledgeable and involved in popular culture. They also tend to be less price conscious and value style.

Price: The price point for H&T will be slightly higher than Hang Ten’s current products to impart an upscale image and convey higher product quality; both in material and design.

Product: H&T currently offers Korean fashionable products, relatable to the current fad about K-pop and Korean dramas. In place of Hang Ten’s emphasis on basic casual apparel, H&T focuses more on smart casual clothes consumers often wear to hang-out and for nights out.

Being more trend-oriented and fashionable, H&T’s offerings will not cannibalise on Hang Ten’s products, but rather supplement them in other usage situations and purchase considerations, widening brand salience. A wider range of products is also offered by H&T, including accessories, footwear, knits and jeans.

Place: Rather than expanding into heartland malls like Hang Ten did, H&T retail stores will be opened in higher-end malls (e.g. ION Orchard, Somerset 313, VivoCity, Citylink etc.). H&T products will also be made available for online-shopping on a new, dedicated H&T Singapore website.

Promotion: As in Korea, H&T will rely heavily on celebrity endorsement. Korean celebrities, for one, are highly popular in Singapore, and many often hold music performances here. Idolised girl-band SNSD, singers Jay Park, se7en, Kim Hyunjoong (also currently a H&T brand-ambassador) and actor Jang Geun Suk have all recently made tours to Singapore.

To further reinforce the link between H&T and stylish Korean popular fashion, H&T can sponsor the performances of artists who endorsed H&T products, or K-pop artists in general (e.g. through K-Pop Asia, a dedicated community for K-Pop Korean pop-culture appreciation). Advertisements in fashion magazines and outdoor media around shopping and lifestyle hotspots such as Orchard Road and Clarke Quay are also viable to further increase visibility.

Challenges to growth

Competitors: 

By placing its products in the smart-casual segment with higher prices, H&T comes face-to-face with renowned fashion retailers such as H&M, Forever21 and Topshop, all of which have a strong presence and regional flagship stores in Singapore.

While competition is predicted to be stiff, H&T has an edge over its Western-oriented competitors by offering Korean-style products which none of them carry. This “Asian style” advantage, combined with the current hype about all things Korean, can strongly support H&T’s initial market penetration.

Reliance on fads: 

Despite its current popularity, the Korean fad may overtime decline, just as previous hypes about Taiwanese and Japanese dramas have come and gone. Lasting an average of not more than 5 years, the eventual decline in the popularity of Korean pop-culture and fashion can and will adversely impact H&T’s performance if it fails to capture a sizeable market within this period or keep up-to-date with upcoming fashion trends.

While the former can be addressed by its time and mode of entry and subsequent marketing program, the latter requires H&T to offer more than just celebrity endorsements. To retain customers once the Korean fad has fizzled out, therefore, H&T needs to simultaneously emphasize its product’s quality while continuously updating and expanding its collection to include styles popular in the region (esp. those of major fashion-hubs such as Taiwan, Japan and Hong Kong), as opposed to those popular only in Korea.