Store Openings and Events All Stopped... Distribution Industry Hit by Troubles

Avoidance of Contact Spreads Due to 'Wuhan Pneumonia'

Department Store and Duty-Free Shop Sales Decline

Fashion and Beauty Face Blocked Sales Channels

As the number of infections from the novel coronavirus (Wuhan pneumonia) originating in Wuhan, Hubei Province, China, increases, the domestic distribution sector is also trapped in a 'dark atmosphere.' The World Health Organization (WHO) raised the international risk level of the novel coronavirus from 'moderate' to 'high,' and with the first 'secondary infection' case occurring domestically on the 30th, the domestic market is rapidly contracting. Amid growing anxiety, a tendency to avoid 'multi-use facilities' has emerged, leading distribution companies to cancel or postpone various events and store openings. With China controlling its delivery network, fashion and cosmetics companies' business in China is also in a 'business suspension' state.

◆"No Contact" Distribution Sector Comes to a Halt= Department stores, marts, and duty-free shops have fallen into panic. As the tendency to avoid places where many people gather becomes prominent, sales on the 28th and 29th, after the Lunar New Year holidays, dropped by more than 20% compared to usual. Distribution companies are reviewing various events and postponing new store openings while closely monitoring the situation.

Hyundai Department Store and Shinsegae Department Store have indefinitely postponed some special lecture events. CGV Sungshin Women's University Station branch, known to have been visited by the 5th confirmed case of the novel coronavirus infection, will be closed until the 2nd of next month. Lotte Duty-Free, celebrating its 40th anniversary this year, and Lotte Chilsung, marking its 70th anniversary, are deeply concerned. They expect the novel coronavirus situation to prolong and are considering reducing event scales or postponing them.

Duty-free shops are distressed by the cancellation of Chinese tourists' visits to Korea. A duty-free shop official said, "Due to the Chinese government's travel restraint recommendation, all group tours and duty-free shop visits planned by Chinese visitors have been canceled," adding, "If the 'daigou' (Chinese personal shoppers) are immobilized, sales will suffer serious damage." Hyundai Department Store Group is also reconsidering the opening schedule of the Dongdaemun downtown duty-free shop planned for February.

The atmosphere in large marts is also subdued. A mart official explained, "We will know the extent of the impact only after the weekend," adding, "We have stopped tasting corners and events and are monitoring the situation, but we expect it will not be easy."

During the 2015 Middle East Respiratory Syndrome (MERS) outbreak, distribution companies suffered severe sales damage. According to the Ministry of Trade, Industry and Energy, department store sales dropped by 11.9% and large marts by 10.2% in June 2015 compared to the previous year, immediately after the MERS outbreak. Hotels are also experiencing a wave of reservation cancellations. Hotels near Myeongdong saw a 20% increase in cancellations compared to the previous year. Lotte Hotel Jamsil had 50 room cancellations over the four days of the Lunar New Year holidays. Accordingly, distribution companies expect this situation to continue until the first half of the year and are adjusting their business plans.

◆Fashion and Beauty Industries Blocked from Chinese Market= As the Chinese government controls the nationwide delivery network, including Wuhan, the epicenter of the epidemic, fashion and beauty companies' sales channels in China have been blocked. Major logistics companies operating in China, such as CJ Logistics, Hanjin, and Lotte Global Logistics, have all reportedly suspended operations.

Domestic beauty and fashion companies that opened official stores on Tmall, Alibaba's cross-border e-commerce platform, recently posted notices about difficulties in delivery within China. Amorepacific's Sulwhasoo announced, "From now on, urgent deliveries to the Wuhan area will be delayed, and we will inform you individually when they resume." LG Household & Health Care's su:m37 also stated, "Due to the epidemic, deliveries have been suspended for orders placed after 4 p.m. on January 28."

AHC, which ranked first in domestic cosmetics on Tmall during last November's Singles' Day event, has completely stopped deliveries to China.

AHC said, "Due to the novel pneumonia, our store will be closed from January 29 to February 9," adding, "We will closely monitor epidemic information and prevention progress and will deliver as soon as possible." Dr. Jart+ also warned that deliveries for orders placed after 4 p.m. on the 28th would be delayed.

Domestic fashion companies are also inevitably facing damage. F&F, which holds the Chinese distribution rights for the fashion brand MLB, is expected to be heavily impacted. MLB's notice on Tmall stated, "Due to restrictions in the Hubei area, transportation has been temporarily suspended," adding, "The specific recovery period is undecided." FILA also announced, "Shipments to the Hubei area have been temporarily suspended due to the epidemic."

This content was produced with the assistance of AI translation services.