To Succeed, Regional Commercial Districts Must Have at Least One of These: External Capital, Resident Demand, or Dual Worker-Tourist Structure

Regional commercial districts in South Korea are finding success by attracting a diverse range of customers, according to an analysis by KB Financial Group. The study identified three key elements crucial for the revitalization of commercial areas outside the Seoul metropolitan region: attracting external capital, cultivating a strong base of local residents or workers, or establishing a dual customer structure that caters to both daytime office workers and nighttime tourists.

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Commercial districts that have one or more of these three factors can grow.

The KB analysis, which utilized consumption data, floating population, vacancy rates, and rental costs, found that commercial areas with varied customer flows, whether locals and tourists or workers and families, tend to be more active. For instance, Busan's Seomyeon district thrived on internal growth, initially boosted by independent shops and studios attracting younger demographics on weekends. This was further supported by high-spending professionals from nearby financial and insurance institutions during weekdays. In contrast, areas like Jeonju's Gaeckridan-gil benefited from tourist spending, with visitors moving from daytime attractions to evening dining and entertainment spots.

Other successful examples include Yeosu's seaside area, where commercial revenue increased along popular tourist routes, and Cheonan's Buldang district and Gwangju's Sangmu district, which are supported by a strong base of workers from nearby industrial complexes and administrative centers. Jeju's Yeon-dong district showcases a temporal division, with public and corporate employees frequenting the area during the day and tourists from duty-free shops and hotels visiting at night and on weekends.

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The survival of regional commercial districts hinges on diversifying the incoming population.

However, the overall condition of regional commercial districts remains fragile. As of late March, the average monthly sales per store in regional areas stood at 17.51 million won, a mere 35.8% of Seoul's 48.9 million won. Similarly, the average number of daily visitors to regional stores was just over a quarter of those in Seoul. The KB Financial Group concluded that as commercial districts shift from relying solely on permanent residents to a model incorporating lifestyle and visiting populations, diversifying incoming visitors is key to survival. Experts also stress the need for tailored solutions, with Professor Mo Jong-lin of Yonsei University's Graduate School of International Studies emphasizing that cultural districts and neighborhood commercial areas must leverage their unique charms and establish ecosystems that support local brands with distinct content.

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Cultural districts and neighborhood commercial areas must develop their own content-driven brands.