'Chuseok and Kim Young-ran Act Eased' COVID-19 Defeated... Offline Retail Up After 8 Months↑

Industry Minister Mentions "Spark of Economic Recovery," Attention on October Performance Ahead of 'Kosepe'

On the 14th of last month, a large supermarket in downtown Seoul displayed Chuseok gift sets priced over 100,000 won. To overcome the economic downturn caused by the novel coronavirus disease (COVID-19), the government temporarily eased the upper limit of the Improper Solicitation and Graft Act (commonly known as the Kim Young-ran Act) from 100,000 won to 200,000 won. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Chaeseok] Offline retail sales, which account for more than half of South Korea's total retail sales, turned to growth for the first time in eight months. Although performance had deteriorated due to reduced customer visits amid the spread of COVID-19, last month saw a significant boost from the Chuseok holiday effect.

Chuseok was delayed from September 13 last year to October 1 this year, which postponed the reflection of Chuseok gift set sales. During this period, the Anti-Corruption and Civil Rights Commission temporarily relaxed the gift limit for agricultural, fishery, and livestock products under the Improper Solicitation and Graft Act (Kim Young-ran Act) from 100,000 won to 200,000 won, which also had an effect.

Offline Retail, Shrunk by COVID-19 and Monsoon, Finally 'Stretches'

On the 15th of last month, Chuseok gift sets priced over 100,000 won were displayed at a large supermarket in Seoul. The government temporarily relaxed the upper limit of the Improper Solicitation and Graft Act (commonly known as the Kim Young-ran Act) from 100,000 won to 200,000 won to overcome the economic downturn caused by the novel coronavirus disease (COVID-19). / Photo by Moon Ho-nam munonam@

On the 25th, the Ministry of Trade, Industry and Energy announced that offline retail sales last month increased by 1% compared to the same month last year. As a result, overall performance rose by 8.5%. Online sales increased by 20%.

Looking at offline sales by store type, large discount stores (5.3%), SSMs (4.6%), and convenience stores (2.3%) saw increased sales. Department stores (-6.2%) declined.

As of last month, offline sales accounted for 56.4% of South Korea's retail market. The breakdown is large discount stores 20.5%, convenience stores 16.6%, department stores 15.3%, and SSMs (Super Supermarkets, semi-large stores) 3.9%.

Offline retail performance struggled throughout the year, recording a sharp -17.6% in March. According to the Ministry of Trade, Industry and Energy, sales increased by 4.1% in January compared to the same month last year, thanks to an earlier Lunar New Year holiday, but then recorded negative growth for seven consecutive months.

The main reasons for the decline in offline performance from February to August, as announced by the ministry, were ▲ decreased store visits due to the spread of COVID-19 ▲ the impact of a prolonged monsoon season ▲ and the delayed Chuseok holiday compared to last year (in August).

Increase in Agricultural, Fishery, and Livestock Product Sales... Effect of 'Kim Young-ran Act' Relaxation

On the 14th of last month, a large supermarket in downtown Seoul displayed Chuseok gift sets priced over 100,000 won. To overcome the economic downturn caused by the novel coronavirus disease (COVID-19), the government temporarily relaxed the upper limit of the Improper Solicitation and Graft Act (commonly known as the Kim Young-ran Act) from 100,000 won to 200,000 won. Photo by Hyunmin Kim kimhyun81@

Overall, the delayed Chuseok holiday had a significant effect. Large discount stores saw the timing of gift set sales shift from August last year to last month due to the later Chuseok holiday. Thanks to this, food sales last month increased by 14.9% compared to the same month last year.

SSMs also saw overall food sales increase last month, including agricultural, fishery, and livestock products (9.9%), fresh and prepared foods (5.5%), and processed foods (3.9%), due to the delayed Chuseok holiday.

Looking at total sales by product category in September, including online, food sales rose 18.5% year-on-year, ranking second in growth rate.

The top growth category was home appliances and culture (22.3%), driven by increased consumption of indoor lifestyle goods due to COVID-19.

The Chuseok holiday effect also influenced online performance. Food sales increased by 60.2% year-on-year due to increased demand for Chuseok ritual items and gifts.

Government Highlights 'Spark of Economic Recovery' Ahead of Korea Sale Festa; October Sales in Focus

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy (right male) speaking at the '2020 Korea Sale Festa Promotion Committee Meeting' held on the 23rd at Maehwa Hall, Korea Press Center, Seoul. Attendees included Kim Yeon-hwa, Chairperson of the Korea Sale Festa Promotion Committee, Ha Hyun-soo, President of the National Merchants Federation, Lim Won-bae, President of the Supermarket Cooperative Federation, Moon Young-pyo, President of the Chain Store Association, and Hwang Beom-seok, President of the Department Store Association, among other promotion committee members. (Photo by Ministry of Trade, Industry and Energy)

There is interest in whether offline retail sales around the Korea Sale Festa, which the government expects to be a "spark for economic recovery," can maintain their upward trend. The Korea Sale Festa will be held from the 1st to the 15th of next month. According to the Korea Sale Festa Promotion Committee, 1,328 companies will participate in this event, the largest scale ever.

Earlier on the 23rd, Minister of Trade, Industry and Energy Sung Yun-mo stated, "We will do our utmost with the industry to make the Korea Sale Festa next month a spark for economic recovery through consumption and domestic demand revival."

However, since the culture of 'non-face-to-face consumption' expanded due to COVID-19 has not been fundamentally overcome, it is uncertain when high value-added department store fashion sales will rebound.

Looking at department store sales last month, fashion sectors such as women's casual (-37.4%), women's suits (-30.6%), and accessories (-28.9%) remained sluggish.

The Ministry of Trade, Industry and Energy plans to announce retail performance for this month at the end of next month.

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