Korean Retail: Online Sales Up for 4 Months Amid COVID-19, Offline Sales Down

Online Sales Increase by Double Digits Year-on-Year for Four Consecutive Months from February
"Impact of 'Top Efficiency Home Appliance Rebate Policy' on Online Growth"
Offline Sales Decline for Four Consecutive Months from February Due to COVID-19

The 'Top Efficiency Home Appliance Rebate Program' was a somewhat comforting factor in the Korean retail industry in May. (Photo by LG Electronics)

[Asia Economy Reporter Moon Chaeseok] The expansion of the novel coronavirus infection (COVID-19) has led to an increase in sales for online retailers while offline sales have declined for the fourth consecutive month. The government explains that the 'Top Efficiency Home Appliance Rebate Program' has influenced online sales. This policy refunds 10% of the purchase price up to 300,000 KRW when buying energy-efficient home appliances.

According to the Ministry of Trade, Industry and Energy on the 29th, sales of major retailers last month increased by 2% compared to the same month last year.

Sales of 13 online retailers including eBay Korea (Gmarket, Auction), 11st, and Interpark increased by 13.5%. Meanwhile, sales of 13 offline retailers including three department stores, three large discount stores, three convenience stores, and four SSMs (Super Supermarkets) decreased by 6.1%.

Online retailer sales maintained double-digit growth last month following increases of 34.3% in February, 16.9% in March, and 16.9% in April. Offline retailer sales increased by 4.1% in January but reversed to -7.5% in February as COVID-19 spread. The decline continued with -17.6% in March, -5.5% in April, and -6.1% in May.

Online retailers saw sustained sales growth due to the spread of non-face-to-face consumption amid COVID-19 and the impact of the high-efficiency home appliance rebate program.

Firstly, the overall 13.5% sales increase was influenced by growth in food (38.8%) and daily necessities & furniture (22.7%). Sales of home appliances & electronics (18.8%), related to the Top Efficiency Home Appliance Rebate Program, also increased.

However, due to social distancing measures, consumption of travel-related products declined, causing sales in services & others (-19.1%) to continue decreasing. This sector had also been sluggish with -21.3% in April.

Offline sales decreased by 6.1%. By type, SSMs (mid-to-large supermarkets, -12.4%), large discount stores (-9.7%), and department stores (-7.4%) declined, while convenience stores (0.8%) increased.

In particular, department stores were hit hard in fashion product categories such as women's casual wear (-32.4%), women's suits (-20.3%), and men's clothing (-15.8%) due to the impact of COVID-19.

At least in large discount stores, sales of home appliances & culture increased by 1.3% thanks to the 'Top Efficiency Home Appliance Rebate Program,' providing some consolation.

Sales per store could not avoid declines due to COVID-19: SSM -8.1%, department stores -4.1%, convenience stores -4.9%, and large discount stores -9%.

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