"Discount Events Are Good, But..." Fashion Industry Candidly Voices Complaints About 'Disaster Relief Funds'

Fair Trade Commission Remarks at 'Distribution-Supply Win-Win Agreement Ceremony'
Supply Industry Sales Plunge Over 90% in March-April
Sales Still Down Over 70% in May

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[Asia Economy Reporter Minyoung Cha] "A solution is needed for the issue where disaster relief funds cannot be used inside department stores and are only allowed at external stores."

On the 7th, according to the related industry, Seohee Oh, CEO of Lin S&J, which operates the women's fashion brand 'Montemilano,' openly expressed such dissatisfaction at the 'Distribution-Supply Win-Win Agreement Ceremony to Overcome the COVID-19 Crisis' hosted by the Korea Fair Trade Commission on the 4th.

CEO Oh pointed out, "Most department store suppliers saw sales drop by more than 90% in March and April, and by more than 70% in May," adding, "While activating discount events (Korea Together Sale) is important, a solution is needed for the problem where disaster relief funds cannot be used inside department stores and are only allowed at external stores." She demanded a fundamental government-level solution, stating that the exclusion of department stores and large marts from the usage of COVID-19 related disaster relief funds has also affected the supply industry.

Earlier, from the 18th of last month, the government excluded large marts, online malls, department stores, and corporate supermarkets (SSM) from the eligible usage locations for the 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.

With sales slumping due to COVID-19 since the beginning of the year, the overlapping restriction policy on disaster relief fund usage led to fewer visitors to department stores and large marts, resulting in a tougher May. According to the Ministry of Trade, Industry and Energy's 'April Major Retailers Sales Trends,' offline sales decreased by 5.5% compared to the same month last year, contrasting with the online sector (+16.9%). During this period, sales of fashion and accessory product groups plunged by 19.2% compared to the same month last year, suffering the greatest impact among product categories.

Moon Young-pyo, CEO of Lotte Mart and representative of the Chain Store Association attending the event, 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, Fair Trade Commission Chairman Seongwook Cho said, "Since 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 Fair Trade Commission's jurisdiction, we will convey opinions well to related departments and strive to create long-term alternatives that can be reviewed at the Fair Trade Commission level."

Meanwhile, the win-win agreement ceremony was held under the supervision of Fair Trade Commission Chairman Seongwook Cho. To help overcome the crisis faced by suppliers in fashion and other sectors due to COVID-19, the distribution industry including department stores, large marts, and e-commerce will provide support through marketing assistance, early payment of funds, and reduction of sales commissions. The Fair Trade Commission will also support 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.