3 Major Service Industry Trends: Digital Transformation, Contactless Distribution, and Homeconomy Selected

[Asia Economy Reporter Hwang Yoon-joo] The three major domestic service trends expected to emerge after the end of the novel coronavirus infection (COVID-19) are digital transformation, contactless distribution, and homeconomy.

According to the 'Post-COVID, Changing Domestic Service Industry Ecosystem' report released on the 25th by the Korea International Trade Association's International Trade and Commerce Research Institute, the gross domestic product (GDP) of the service industry in the first quarter of this year decreased by 2% compared to the previous quarter due to the impact of COVID-19.

While face-to-face sectors such as transportation (-12.6%), wholesale and retail, food and lodging (-6.5%), and culture (-6.2%) were severely affected, the information and communication industry (5.9%) showed a favorable trend. The service industry economy is expected to gradually recover from the second half of the year, when the effects of government stimulus and revenge consumption are expected to appear.

The report first focused on the expansion of services utilizing digital technology. As online economic activities increased, wireless data traffic from January to March rose by 45.6% year-on-year, reaching a record high of 1.83 million terabytes (TB). The demand for advanced technologies such as cloud, remote solutions, and 5th generation mobile communication (5G), which enable telecommuting, online school openings, remote lectures, and multi-simultaneous access from outside, is also expected to continue increasing.

An expansion of contactless distribution services is also anticipated. Due to the epidemic, sales at department stores (-19.4%) and large marts (-2.9%) decreased in the first quarter, while non-store sales such as internet and home shopping increased by 7.6% compared to the previous quarter. Along with this, support services such as parcel delivery, Online-to-Offline (O2O) connections, and drive-thru are also expected to grow.

As more people spend leisure time at home, sales of movie and music streaming, games, and other content are also increasing. With the proportion of single-person households expected to rise from 29.8% in 2019 to 32.3% in 2025, homeconomy (Home+Economy) industries such as home appliance rentals, on-site cleaning, and leisure content are expected to develop as major consumer trends.

Shim Hye-jung, senior researcher at the Korea International Trade Association, emphasized, "The changes caused by COVID-19 will not be temporary phenomena but will settle as global consumption trends. Startups with excellent IT innovation technologies and cultural content companies such as those in film and games have sufficient competitiveness in the global market, so it is worth actively pursuing overseas expansion."

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