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Apple Looks to Open First Store in Samsung’s Backyard
Apple executives scouted potential sites near Samsung’s headquarters in Seoul
By JONATHAN CHENG
Sept. 22, 2016 6:25 a.m. ET
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SEOUL— Apple Inc. has made inquiries about opening its first retail store in South Korea, in a signal that the technology company might be looking to step up competition in the backyard of smartphone rival Samsung Group.
Apple looked at sites across the street from the group’s longtime headquarters in Seoul, according to people familiar with the matter.
The Cupertino, Calif., company, which is Samsung Electronics Co.’s biggest rival in the mobile-phone market as well as a major customer of its smartphone components, is looking at locations near the South Korean company’s own three-story global flagship store in Seoul’s upscale Gangnam neighborhood, the people said. The company has sent retail executives to South Korea in recent months to check out potential sites for the store, they said.
The people warned that Apple’s plan hasn’t been completed and a store opening could take about a year.
“We have made no announcements about a store there,” a spokesman for Apple said.
A spokeswoman for Samsung Electronics declined to comment.
South Korea, Asia’s fourth-largest economy, has long been a tough market for Apple. Smartphone sales are dominated by hometown favorites Samsung and LG Electronics Inc., who together account for about 80% of the smartphone market in the country. Apple doesn’t break out sales for South Korea separately.
After the launch of the larger-screen iPhone 6 and iPhone 6 Plus in late 2014, Apple jumped to about one-quarter of the market, before its share fell below 10% in the second quarter of 2016, according to data tracker Strategy Analytics.
Opening a glitzy flagship store would send a message that Apple intends to compete hard on Samsung’s home turf.
From a glass cube on New York City’s Fifth Avenue to a Norman Foster-designed store in Istanbul, Apple has used its prominently placed retail stores to attract buzz for the brand and to sell premium handsets. In Seoul, Apple has scouted potential locations around the Gangnam subway station, Seoul’s busiest and home of the headquarters of Samsung Group, as well as another site on Seoul’s fashionable Garosu-gil shopping street, according to the people.
In South Korea, Apple relies on third-party retailers who apply for licenses to operate as authorized Apple resellers, as well as carrier partners.
In mainland China, a critical market for Apple, the company has opened 36 Apple stores, including in Shanghai and in second-tier cities such as Nanning, Fuzhou and Jinan. It has six Apple stores in Hong Kong and seven in Japan.
Apple’s hunt for retail real estate in Seoul comes as Samsung grapples with a recall of its latest smartphones amid reports of batteries in the Galaxy Note 7 catching fire. Analysts estimate the recall of 2.5 million devices could cost Samsung more than 1 billion dollars.
Before the Note 7 recall, Samsung reported its most profitable quarter in two years in July as Apple suffered a 27% drop in quarterly net profit compared with a year earlier.
Samsung’s share of the global smartphone market rose to 22.3% in the most recent quarter from 21.8% a year earlier, according to research firm Gartner. Over the same period, Apple’s share fell to 12.9% from 14.6%.
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