"Now Recovering..." Retail Industry Faces Challenges Amid COVID-19 Resurgence

Recovery after poor first-half performance, contraction amid signs of second COVID-19 wave
Fewer people visiting multi-use facilities like department stores and marts
Hotels also anxious, buffet operations suspended due to social distancing guidelines

[Asia Economy Reporter Lim Hye-seon] The distribution industry, which was showing signs of recovery after a sluggish first half, is shrinking again amid indications of a second wave of the novel coronavirus infection (COVID-19). The government has strengthened social distancing measures in the metropolitan area, and as 'COVID-19 fear' spreads, the number of people visiting multi-use facilities such as department stores and large supermarkets is decreasing.

According to the distribution industry on the 19th, Shinsegae Department Store's total sales on the 18th, right after the Liberation Day golden holiday, fell by 12.7% compared to the previous week. By category, sales of women's fashion and men's fashion decreased by 25.2% and 14.9%, respectively. Luxury goods sales, which were unaffected by COVID-19, also dropped by 17.9%. Lotte Department Store's total sales also decreased by 15.0% compared to the previous week. During this period, large supermarket sales also declined by 2-5% compared to the previous week.

Consumer sentiment changed drastically to the worst situation in just one day. This contrasts with the previous weekend, which was a golden holiday. Lotte and Shinsegae Department Stores saw sales increase by 8.0% and 18.6%, respectively, from the 14th to the 17th compared to the previous week. Compared to the same period last year, sales increased by 16.0% and 17.5%, respectively. Large supermarkets also conducted large-scale discounts and promotional events during the holiday, boosting sales. Emart and Lotte Mart's performance increased by more than 6%.

The distribution industry is concerned that the situation from March to May, when sales declined due to the spread of COVID-19, may recur. The three major distribution companies?Lotte Shopping, Shinsegae · Emart, and Hyundai Department Store?saw their operating profits plummet by 80-90% in the first half (January to June). After the COVID-19 situation began to stabilize, the performance of distribution companies gradually improved, showing signs of recovery to last year's levels from June. Distribution companies expected a performance rebound starting with the golden holiday but have entered an emergency response system again due to the uneasy atmosphere. A distribution industry official explained, "The decrease in the number of visitors is a problem, but if temporary store closures are repeatedly confirmed due to visits by confirmed cases, it will cause significant damage to sales," adding, "We are closely monitoring the situation."

Hotels, which had been lively during the summer vacation season, are also anxious. According to the hotel industry, the cancellation rate of reservations at 5-star hotels in Seoul city has been between 2-10% since the 18th. Following the government's strengthened social distancing guidelines, hotels have temporarily suspended lunch and dinner operations at buffet restaurants. Breakfast will be operated with ? la carte menus. A hotel industry official said, "Although the cancellation rate has not sharply increased yet, if the number of confirmed COVID-19 cases surges, the situation will change rapidly," adding, "Reservation rates are already showing a declining trend compared to the previous week."

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