As the birth rate in South Korea drops to 0.75, leading to a sharp decline in the population of infants and children, traditional corporations in the children's clothing industry are seeing a downturn in their performance. In contrast, new companies that have grown around online e-commerce are improving their results, leading to a mixed outlook.
According to the population trends survey by Statistics Korea on the 17th, South Korea's total fertility rate recorded 1.17 in 2016 and has fallen for eight consecutive years to 0.72 in 2023. Although there was a slight rebound in 2024, it remains at just 0.75.
Additionally, with the economic recession, traditional corporations in the children's clothing industry have faced poor performance. According to the 2024 small and medium-sized enterprises business outlook survey, the business outlook index did not surpass 100 even once throughout the year, indicating that small and medium-sized enterprises continue to have a negative perception of the economy and business conditions.
AGABANG&COMPANY recorded consolidated sales of 182.7 billion won and operating profit of 15.2 billion won in 2024, down 2% and 8.4%, respectively, compared to the previous year.
Seoyang Networks also recorded sales of 193.4 billion won and operating profit of 10.3 billion won during the same period. Sales decreased by 5% from the previous year, while operating profit fell by 37%.
Zero to Seven saw its sales decrease from 69.4 billion won to 66.9 billion won, a drop of 3.7%, while operating profit decreased from 2.3 billion won to 1.5 billion won, a reduction of 35%.
In this situation, children's clothing corporations focused on online e-commerce have shown growth in their performance.
The children’s apparel startup Childi recorded an operating profit of 3 billion won in 2024, successfully turning a profit just four years after its founding. New Kids On, the top e-commerce platform for children's clothing, achieved sales of 50 billion won, an 11% increase from the previous year, while operating profit rose from 2.6 billion won to 4.5 billion won, a 73% increase over the same period.
The two corporations were able to show strong performance due to their distribution strategies centered around online malls.
Online-based distribution has a high product turnover rate and allows for standardized logistics and integration, making it structurally more profitable.
Kang Jun-ki, the CEO of Childi, noted, "By increasing the sales proportion through our online mall to about 90%, we were able to establish an efficient revenue structure without losing distribution margin, enabling us to turn a profit." New Biz On also plans to expand the sales proportion from brand stores in its own mall from the current 35% to over 50%.
"Content-based marketing that emphasizes the shopping experience has also played a major role in driving performance. Both Childi and New Kids On are expanding their engagement with consumers through enhanced content such as lookbooks, styling guides, and user-centered user interfaces."
Han Yu-jin, a professor in the Entrepreneurship major at Sookmyung Women’s University, stated, "The reason consumers use apps like Musinsa is not only for purchasing clothes but also to experience curation of trends and user convenience," adding, "In a situation where clothing has become standardized, the marketing aspect is also becoming increasingly important."