Home Appliance Industry Faces COVID-19 Crisis as Customers Decline and Olympic Boom Disappears

Significant Drop in Customers Visiting Offline Electronics Stores Due to COVID-19
Expected Olympic Boom Likely to Disappear

[Asia Economy Reporter Changhwan Lee] Concerns over poor performance in the domestic home appliance industry are growing due to the spread of the novel coronavirus infection (COVID-19). As people refrain from going out because of COVID-19, the number of customers visiting home appliance stores has significantly decreased, and the anticipated Olympic-related sales boom is also at risk of disappearing.

According to the related industry on the 13th, since last month, as COVID-19 has spread widely in Korea, the number of customers visiting home appliance stores has sharply declined.

The industry estimates that the number of visitors to offline home appliance stores such as Lotte Hi-Mart, Samsung Digital Plaza, and LG Electronics Best Shop last month decreased by about 10-20% compared to the same period last year. As the number of customers decreased, the financial investment sector expects that the sales and operating profits of these offline stores in the first quarter of this year will also decline by more than 10% compared to the same period last year.

The decline in performance is expected to be accompanied by restructuring. In fact, Lotte Hi-Mart plans to close 11 offline underperforming stores this year and consolidate 21 stores to improve profitability. Recently, the company has also implemented its first-ever voluntary retirement program since its founding.

A representative from the home appliance industry said, "As people refrain from going out due to COVID-19, the number of customers visiting home appliance stores has significantly decreased recently," adding, "With actual consumption declining, a drop in performance is inevitable."

Among products, the TV industry is the most concerned. This is because large-scale events such as the Olympics and international football tournaments, which were highly anticipated, are at risk of being canceled or postponed. Haruyuki Takahashi, Executive Director of the Tokyo Summer Olympics Organizing Committee, stated in an interview with The Wall Street Journal on the 10th that while the Olympics cannot be canceled, a two-year postponement is an option.

Director Takahashi is expected to have the working-level staff review the impact of postponing the event before the organizing committee meeting scheduled for later this month. U.S. President Donald Trump also proposed a one-year postponement of the Olympics on the 12th (local time).

The 2020 UEFA European Football Championship (Euro 2020), hosted by the Union of European Football Associations (UEFA), also faces uncertainty regarding its hosting. UEFA maintains its stance to proceed with Euro 2020 as planned, but with the worsening situation in Europe, whether it will be held remains uncertain.

The TV industry had expected a significant increase in sales of high-priced TVs this year due to the overlap of the Summer Olympics and Euro 2020. TV manufacturers such as Samsung Electronics and LG Electronics had planned various sales events accordingly. However, with the uncertainty surrounding these events, it is difficult to expect a sales boom.

A home appliance industry official said, "It is true that high-priced TVs, which have high profit margins, sell well during large international events like the Olympics," adding, "This year, due to COVID-19, it is difficult to expect an Olympic-related sales boom."

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