Mixed Fortunes for Convenience Stores and Duty-Free Shops & Department Stores Amid New Coronavirus Impact

[Asia Economy Reporter Kum Boryeong] The impact of the novel coronavirus infection (Wuhan pneumonia) is causing contrasting fortunes for duty-free shops, department stores, and convenience stores.

According to the Korea Duty Free Shop Association on the 5th, last year's duty-free shop sales amounted to 24.8586 trillion won, a 31% increase compared to the previous year. In particular, foreign sales centered on Chinese daigou shoppers grew by more than 38%, reaching 20.8129 trillion won.

Although duty-free shops had been doing well for a while, the novel coronavirus issue is expected to inevitably lead to a decrease in the number of Chinese visitors and sales. In addition, the duty-free industry has decided to shorten business hours for the time being. Lotte Duty Free, Shinsegae Duty Free, and Shilla I'Park Duty Free, among others, reduced their operating hours by about two hours starting from the previous day.

The situation is similar for department stores. To prevent the spread of the novel coronavirus, major department stores will close for one day this month. Typically, department stores operate without any days off during months with many holidays overlapping the Lunar New Year, but this year they have created temporary closure days to carry out disinfection work.

Stock prices of department stores and duty-free shop owners are on a steep decline. Hotel Shilla's stock price, which was 101,000 won on the 22nd of last month, fell by more than 11% to 89,700 won the day before. During the same period, Shinsegae dropped 13.47% from 315,500 won to 273,000 won, and Hyundai Department Store fell 11.63% from 88,600 won to 78,300 won.

On the other hand, there is an analysis that convenience stores do not need to worry much. Eugene Investment & Securities Research Center explained, "Convenience stores are local distribution channels and have a high proportion of sales in alcohol and tobacco, which cannot be delivered online. Even if most daily necessities are purchased online due to concerns about contagion, alcohol and tobacco cannot be resolved this way, so demand for convenience stores is likely to be maintained regardless of concerns about the novel coronavirus."

Even excluding the novel coronavirus issue, there are many positive factors for convenience stores this year. A large-scale convenience store contract renewal market will open this year, so market share increases centered on GS Retail and BGF Retail are expected. It is also positively evaluated that concerns related to costs are not significant this year, as the minimum wage increase rate has slowed compared to the past 2-3 years.

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