Having a global presence and recognition would have been hard to imagine only just a few years ago for Korea’s fashion industry, which is increasingly on global brands’ radars thanks in large part to fashion’s ability to benefit from the recent surge in popularity of K-films and series, according to Mun-il Han, who became CEO of the Seoul-based fashion marketplace in 2022 at the age of 33. “When I look back [in 2018 when I joined] fashion marketplace Musinsa, it usually was quite rare that a CEO or a top executive of a global brand would actually come to Seoul, and even if they did, they wouldn’t stay very long,” he recalled. “That has very much changed.”

But Musinsa wasn’t going to wait around for global recognition to make its own mark on Korea’s fashion industry. Starting out in e-commerce’s early days in 2001 as an online platform for sneaker-loving high school kids to share street fashion photos, Musinsa has grown into a fashion marketplace that it says comprises a community of 13 million, largely Gen-Z fans, with a 2023 funding round that reportedly valued the company at approximately $2.76 billion.

According to Han, Musinsa has taken a different approach than other fashion e-tailers by focusing on the sellers — that is, the 8,000 local and global brands selling their apparel and footwear on its Korean platform or via its app, including independent brands it helps fund and support by, for example, providing marketing and innovative initiatives to connect them directly with customers. One such initiative was its first-ever “Musinsa Season Preview” event, where customers could visit four offline venues in Seoul to share their thoughts alongside those of a panel of industry experts on the Spring/Summer 2024 collections from 30 local brands, which could then adjust pricing and inventory based on the feedback.

Beyond Korea, Musinsa is now present in 13 countries, selling around 800 Korean brands. Han said one of the markets where K-fashion is in increasing demand is Japan, where it set up a subsidiary in 2021 and has become the company’s largest global market.

BoF: With bands like BTS, Blackpink and most recently New Jeans (the latter a Musinsa brand ambassador), K-pop’s star just seems to keep rising higher. Analysts at Bernstein recently said the K-pop industry could generate annual revenue of approximately $10 billion by 2030, or roughly double 2023′s level. How is K-fashion riding that wave?

Mun-il Han: I don’t think the global impact of K-pop is fully hitting home to us in Korea. It’s not just K-pop stars but also K-celebrities who are really gaining global exposure with the popularity of K-content or for movies and dramas. Especially fashion and luxury brands, they are leveraging K-pop stars and signing them on as their brand ambassadors. We can indirectly feel the extent to which these pop stars now have so much influence and power.

We’re still in the incipient stages, but I think when these artists or musicians share their daily lives on social media, that’s when fans really take interest. Then also when people watch K-content like movies and dramas and they see how Korean people or celebrities dress or what their lifestyle is like, people gradually start to become familiar with their lifestyle and their dress.

It’s a bit like what happened with hip-hop. People who were doing hip-hop in Korea wanted to emulate that way of life and consume the brands that were part of that. We feel that K-content is now at a similar juncture, where it’s being exported abroad. It’s taken a while for fashion to have a distinct connection with K-culture but it’s starting to happen. At Musinsa, we want to leverage that opportunity to really expand our global footprint, after having grown very rapidly by mainly focusing on the online fashion market in Korea.

BoF: Ever since Musinsa became a fully fledged fashion retail platform in the 2010s, fashion retail generally has been undergoing disruption and change. What has been Musinsa’s role in this? Does Musinsa consider itself one of the disruptors?

MH: We definitely see ourselves as a disruptor. Korea’s fashion market in the past was very much led by the department stores — you only had a handful of brands that were able to launch in department stores and that were recognised as bonified brands. Whereas with the emergence of a platform such as ours, we see many new brands emerging to create a fashion ecosystem.

Back in 2001, we started as an online community. It was a community where young people were able to freely exchange information and narratives about fashion and lifestyle that they were interested in. This was a very active community, a community where we were also able to introduce overseas street fashion brands that Koreans may not have been familiar with and introduce some local brands that were up and coming.

Right from the beginning, we had a very strong understanding of what young people wanted, what their needs were. At the same time, brands were looking for channels to sell their products and large companies also wanted to do business online but weren’t really aware of what young people like and need.

BoF: In terms of that ecosystem, how does it enable Musinsa to differentiate itself in an increasingly crowded e-retailing market?

MH: If we look at this from a platform perspective, the China-based platforms are really doing well in terms of gamification. But in Korea, I don’t think we see any notable results with gamification. Rather than that, I think the biggest differentiator of our company compared to other e-commerce platforms is that we really zero in on managing the sellers.

Also, we focus more on what I would call the “essence” rather than things like gamification. What I mean by that is, people who are interested in fashion or lifestyle through our community are able to ask questions about fashion. They are able to get recommendations from other people within the community. We don’t think that algorithms alone provide the best recommendations, so we try to mix our curation with the data to come up with the best recommendation for our customers.

We’ve always had the philosophy that we focus on the seller. Because of the success of Amazon, most of the e-commerce players at that time were more focused on the buyer side. What we had in mind was something more like a content business, like Netflix and Spotify, while also focusing more on the needs of the seller, the fashion brands on our platform, the small independent brands who have a little bit more of a personality or individuality.

BoF: What does partnering with up-and-coming designers entail? Why do you want to work with these designers?

MH: The key for our business is to be able to secure good, talented new brands, and even enter agreements in which they sell with us exclusively. … We feel the right formula is to really study what their needs are as they are rising, support them to address those needs, and build a good relationship and thereby build a fashion ecosystem.

Just like Netflix invests in production companies, or like YouTube secures a lot of great creators on its platform by providing them with various tools, Musinsa partners with and invests in brands, that investment can provide everything from marketing content to interest-free loans to help fund their production plans or tools on our platform like how-to videos.

After a brand joins us, we’re able to see very quickly the type of reception it is getting, how much feedback there is [from customers on the platform], along with sales figures. So, we’re able to quickly identify if a brand is really growing or if there are any issues that need to be addressed. That’s not to say that we provide equal amounts of support to all our brands. We try to sow as many seeds as possible and then when we see there is explosive growth of a certain high-potential brand, we really try to support them so that we can grow together.

BoF: In 2023, Musinsa secured $190 million of series C funding, led by investment company KKR. Given that you’ve long focused on 20-somethings in Korea, what are your plans for taking Musinsa’s ‘K-ecosystem’ to different demographics and other markets?

MH: First, we are broadening our customer base to include individuals in their late 20s and 30s, due to focus on offering an extended range such as high-end brands.

Offline and online are both important but basically 99.9 percent of our sales occur online, so we have to continue to motivate our consumers to come online to shop. But people do want to try on the clothes before they buy, and so that’s why we’re expanding our offline presence. We expect to start 2024 with two offline flagship stores in Daegu and Seoul. As for our private brand Musinsa Standard, we are operating five stores — three in Seoul and one in Daegu with one, just opened, in Busan.

Our global expansion strategy involves a gradual introduction of westernised global brands and will evolve with emerging brands too. It’s been about a year since we launched our app test cases to run alongside the platform [for non-Korean markets]. Currently it’s in phase one and we have about 800 Korean brands on that app. Phase two should happen around the end of [2024] when we believe we will be able to carry foreign brands too. These would be very westernised types of brands and that would help enhance the visibility of the Korean brands as well. Then in phase three we’re thinking it could be in Tokyo, Bangkok or Singapore or anywhere else, but to really grow the platform to incubate these other new brands.

This interview has been edited and condensed.

This article first appeared in The State of Fashion 2024, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.

Walgreens Boots Alliance Inc. is reviving discussions on a potential exit from its UK drugstore chain Boots, people with knowledge of the matter said, nearly 18 months after a sale process was scrapped.

The company has been holding early talks about ways to separate Boots, which could be valued at about £7 billion ($8.8 billion) in a deal, according to the people. It’s studying a London initial public offering as one possibility, the people said.

Shares of Walgreens jumped as much as 2.9 percent on Tuesday, hitting the highest intraday level in two months. They were up 1.5 percent at 12:56 P.M in New York, giving the company a market value of $20 billion.

A Boots stock offering would be a big boost to the London stock market, which has been hit by a steady flow of companies opting to list elsewhere. UK IPO fundraising has fallen more than 50 percent this year to about $1 billion, according to data compiled by Bloomberg.

Any process would only start next year at the earliest, the people said, asking not to be identified because the information is private. Walgreens reached a deal in November to offload Boots pension risks to Legal & General Group Plc, removing a stumbling block that had complicated previous efforts to divest the business.

Walgreens invited bids for Boots last year as it sought to hone its focus on North America, where it’s been adding more health care services. It abandoned the effort in June 2022 after failing to secure the desired valuation for the business amid a turbulent credit market.

During that last process, Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. had teamed up with Apollo Global Management Inc. on a bid for Boots, which is the biggest UK pharmacy chain. They were competing with a separate consortium backed by TDR Capital and Britain’s billionaire Issa brothers, people with knowledge of the matter said at the time.

Walgreens could also opt to invite fresh offers for Boots, though higher interest rates would make it more difficult for private equity firms to pay top dollar. Deliberations are still at a preliminary stage, and there’s no certainty they will lead to a transaction.

A representative for Walgreens declined to comment.

Walgreens is in cost-cutting mode and has brought on new chief executive Tim Wentworth to attempt to turn around the business. On Monday, Walgreens had its senior unsecured credit rating cut to junk by Moody’s Investors Service, which cited the drugstore chain’s high debt relative to earnings.

Boots runs a sprawling network of more than 2,000 stores across the UK, as well as private-label brands like No7 Beauty Co. and operations in a smattering of other countries. Walgreens said earlier this year that it will close 300 Boots stores in the UK, mainly those in close proximity to other outlets, as it seeks to focus investment on its best performing locations.

By David Hellier, Dinesh Nair and Ryan Gould

Learn more:

Walgreens Shelves Pharmacy Boots’ Sale as Market Turmoil Hits Dealmaking

Walgreens Boots Alliance on Tuesday scrapped the plan to sell its UK high street pharmacy chain, Boots, saying no third party was able to make an adequate offer due to the turmoil in global financial markets.

Far from resolving in 2024, the fashion industry’s supply-chain volatility of the past few years is set to continue. Upstream apparel suppliers and manufacturers have undergone significant disruption, where changes in consumer demand have resulted recently in a sharp decline in factory utilisation, widespread layoffs, and delayed investments. As brands and retailers look to scale up capacity to meet renewed demand, they may start to feel the repercussions of recent upstream strains.

This turmoil is known as the “bullwhip effect,” a phenomenon where changes in consumer demand escalate across the value chain. In the case of fashion, changes in consumer demand are magnified at each step from retailers to garment manufacturers to yarn and raw material suppliers. In the face of falling demand, each part of the supply chain overcompensates by reducing forecasts, lowering production and decreasing order volumes — often driven by communication gaps and forecasting inaccuracies.

The bullwhip effect reached fashion in 2020 and 2021 as retailers contended with pandemic-related disruptions when products arrived late and overcompensated for inventory shortages by ordering too much stock. When post-pandemic inflationary pressures and economic uncertainty arose in the second half of 2022, making consumers more cautious than anticipated, retailers were left with billions of dollars in unsold goods. As a result, many orders for the upcoming 2023 season were reduced or cancelled.

The pullback has disproportionately impacted upstream suppliers. Across seven of the world’s biggest textile exporting countries, fabric exports dropped nearly 20 percent in the last quarter of 2022 compared to the year prior, followed by a 40 percent drop in yarn exports in the first quarter of 2023. Factories that were at full capacity in 2021 may have been operating at 30 percent to 40 percent below capacity in 2023, according to industry experts. It’s a similar story for textile machinery players. Swiss manufacturer Rieter reported a 63 percent year-on-year drop in orders in the first half of 2023, citing weakening demand for spinning technology.

Smaller manufacturers with limited resources have been the most affected. The managing director of a manufacturer in Pakistan estimated that as much as 30 percent of the country’s textile factories have closed. In India, spinning mills have requested aid from the government, while many operate at a loss. Other manufacturing hotspots such as Sri Lanka and Vietnam have entirely shut operations in some factories.

The Bullwhip Snaps

The bullwhip effect has only made more urgent the humanitarian crisis occurring within textile-producing countries. For starters, a large share of textile and garment workers live on low wages and have little if any savings to fall back on. Today, the increased stress on factories could increase the risk of labour abuses, such as wage theft and union busting.

In China, the world’s largest textile producer, the number of worker strikes and protests rose in 2023. According to the China Labour Bulletin, more than 700 factory strikes in the first half of 2023 took place, compared to 800 in all of 2022. In Pakistan, loss of cotton crops from floods, shifts in production and lower exports contributed to over one million of its eight million textile workers losing jobs. Textile employment levels also fell by tens of thousands in key markets such as Bangladesh, Sri Lanka, Cambodia and Turkey in 2023.

This supply-chain volatility is not expected to subside in the near term. A McKinsey survey of chief procurement officers (CPOs) in September 2023 found that 73 percent believe demand volatility will be one of the top challenges to affect supplier relationships over the next five years. However, the third quarter of 2024 is the earliest that textile factories might see some capacity improvement. But even then, the consequences of the bullwhip effect may continue to linger. Layoffs and delayed investments may mean the industry is insufficiently prepared to scale up capacity quickly.

Worker displacement and skills loss may create major challenges for the industry. In Vietnam, for example, competition for qualified labour is intensifying with other industries — suppliers to Apple, Lego and automotive players are among those expanding operations and attracting former textile workers in the country. Factories short on staff and dealing with hiring and training new employees could face longer production timelines.

Brands and retailers not prepared for these shifts could incur higher expenses to compensate for the potential delays. For example, they may need to pay for expedited shipping, overtime work or additional warehouse space. Those that try to rush production face other costs, such as increased quality issues that can damage a company’s reputation with consumers.

Many companies are rethinking their supply chains to de-risk manufacturing. According to McKinsey’s CPO survey, 54 percent of executives expect to increase reshoring or nearshoring in 2024. Others are thinking about rebalancing their sourcing footprint by sourcing from multiple countries. However, these approaches are not without challenges. Finding and contracting new suppliers, or partnering more closely with existing strategic ones, can be costly. Companies can also run into manufacturing limitations compared to traditional sourcing hubs or face new regulatory and compliance factors.

Another consequence of the slowdown is that suppliers have fallen behind in critical investments in new infrastructure for both speed and sustainability. More than 70 percent of fashion’s greenhouse gas emissions stem from upstream activities, such as producing and finishing textiles. Yet, textile players say costs are high for upgrading machinery or adopting greener practices. Without a steady stream of orders, they are postponing capital expenditure on such initiatives. Unifi, a US-based manufacturer of recycled and synthetic fibres, has delayed machinery replacements from 2024 to 2026 to offset slowing demand.

With sustainability regulations coming into effect in the EU and elsewhere that mandate companies disclose environmental impacts in their supply chains, and the push from investors for companies to disclose data about scope three emissions (that is, indirect emissions), the risk may only increase for brands and retailers.

Navigating Disruption

In the year ahead, brands might consider placing greater emphasis on making their supply chains more resilient to mitigate future risks. First and foremost, transparency and communication among all stakeholders in the supply chain will likely be paramount in facilitating better information-sharing and joint demand forecasting. According to McKinsey’s survey, 70 percent of chief procurement officers believe that improving demand transparency with suppliers through systems and processes is critical in navigating market turmoil.

Cultivating strategic partnerships with key suppliers could also be considered and could include longer term contracts with not only direct suppliers, but also tier two, tier three and tier four partners that are vital to a business. One potential benefit of such a long-term commitment is that it can provide a supplier with cash flow to invest in industrial and sustainability improvements at its facilities, according to Florian Heubrandner, executive vice president of global textiles at Lenzing, a wood-based cellulosic fibre manufacturer.

Brands should also continue to actively champion workers’ rights. This includes ensuring fair wages, job protection, safe working conditions and opportunities for professional development for factory workers. Beyond enabling two-way communication with suppliers about this, companies can take steps on their own. Adidas, among other companies, has established a worker hotline to enable workers to voice complaints that it can then work to resolve. Similar initiatives include PVH’s, which includes setting up representative workplace committees for all workers employed by key suppliers by 2025.

The upheavals of recent years have made clear that fashion companies and their suppliers not only depend on each other to succeed, but also endure challenges together. 2024 will likely provide further evidence as to why.

This article first appeared in The State of Fashion 2024, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.