"90% Drop in Sales for 100 Suppliers" Fashion SMEs Point Out Restrictions on Disaster Relief Fund Usage

Sales of Department Store Suppliers Plummet 90% in March and April
Remain Over 70% in May
Disaster Relief Funds Exclude Department Stores, Large Marts, and E-commerce
Underwear Company Supplying Emart Sees 40-50% Sales Drop

A scene of the 'Sangsaeng Expo' special exhibition taking place at the department store. Photo is unrelated to the content of the article.

[Asia Economy Reporter Cha Min-young] Small and medium-sized fashion companies are on the brink of collapse as department stores and large supermarkets are excluded from the usage locations for disaster relief funds related to the novel coronavirus infection (COVID-19). They have expressed the need for government measures to address this issue, drawing attention.

On the 4th, Oh Seo-hee, CEO of Lin S&J, which operates the women's fashion brand 'Montemilano,' stated at the 'Distribution-Supply Win-Win Agreement Ceremony to Overcome the COVID-19 Crisis' hosted by the Fair Trade Commission, "Most department store suppliers saw their sales drop by more than 90% in March and April, and by more than 70% in May," adding, "While activating discount events is important, there needs to be a solution to the problem where disaster relief funds cannot be used inside department stores but only at external stores."

Earlier, from the 18th of last month, the government excluded large supermarkets, online malls, department stores, and corporate supermarkets (SSM) from the usage locations for emergency disaster relief funds. As a result, small and medium-sized enterprise partners supplying fashion, accessories, and baby products also experienced a simultaneous decline in sales. Usage was restricted only to leased stores such as beauty salons, pharmacies, and car washes. According to the Chain Store Association, underwear company A supplies underwear worth 14 billion KRW annually to E-Mart, but its sales have plummeted by about 40-50% compared to the previous year.

Moon Young-pyo, CEO of Lotte Mart, who attended as a representative of the Chain Store Association that day, also appealed, "From the perspective of distribution companies, smooth communication with the Fair Trade Commission's working-level staff is necessary," adding, "There seems to be a burden on communication channels to share opinions related to the incident and to create synergy effects for mutual communication."

In response, Cho Sung-wook, Chairman of the Fair Trade Commission, said, "Since the distribution companies and suppliers have actively promised a win-win agreement, we will commit to flexible, field-centered administration," and added, "Although the disaster relief fund issue is not under the jurisdiction of the Fair Trade Commission, we will convey opinions well to related ministries and strive to create long-term alternatives that can be reviewed at the FTC level."

Meanwhile, the win-win agreement ceremony was held under the supervision of Chairman Cho Sung-wook of the Fair Trade Commission. The main point is that the distribution industry, including department stores, large supermarkets, and e-commerce, supports marketing, early payment of funds, and reduction of sales commissions to help overcome the crisis of suppliers such as those in fashion who are struggling due to the COVID-19 crisis. The FTC also supports by temporarily relaxing the promotional cost-sharing guidelines. If suppliers voluntarily and publicly participate in events and decide the discounted items and discount rates themselves, the obligation for large-scale retailers to share 50% of promotional costs will be temporarily exempted.

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