[In the Survival Lane of Distribution] Department Stores and Marts Warm Line... Barely Survived Despite Offline Decline

This Year's Major Retailers' Online Sales Increase by 16%
Offline Sales Decline in 8 Months Excluding January, September, and October Discount Events

[Asia Economy Reporter Lim Hye-seon] The retail industry, facing an unprecedented recession tunnel due to the prolonged COVID-19 pandemic, barely survived this year through online sales. The fear of infectious diseases accelerated the untact era, shifting consumer patterns from offline to online. As a result, online sales recorded an all-time high, while offline sectors such as department stores and large supermarkets posted their worst performances.

The Retail Industry Survived Through Online Sales

According to the Ministry of Trade, Industry and Energy's 'Major Retailers Sales Trends' on the 31st, offline sales of major retailers increased by 1.9% compared to the previous year last year, but this year, except for three months, sales declined for eight months compared to the previous year, resulting in a 3.3% contraction. The only months with sales growth were January (4.1%), when there was no impact from COVID-19, and September (1%) and October (2.1%), when the large-scale discount event 'Korea Sale Festa' was held.

Online sales, on the other hand, increased by 16.2% compared to the previous year. All product categories including food, household furniture, baby products, cosmetics, and home appliances grew by double-digit percentages. In terms of sales share, home appliances and food accounted for nearly 50% as the time spent at home increased. As a result, the total sales of major retailers from January to November this year increased by 5.1% compared to the previous year. Although offline stores recorded the worst performance ever, the increase in online sales barely kept the industry afloat.

Department Stores Saw Growth Only in Luxury Goods and Home Appliances

In department stores, the number of purchases each month decreased by an average of more than 20.0% compared to the same period last year. Especially in February (33.0%), April (52.1%), and May (31.5%), the number of purchases sharply declined. Large supermarkets also saw a monthly decrease of over 8% in purchase numbers. However, the average purchase price, calculated by dividing sales by the number of purchases, rose due to increased sales of high-priced products. From June to September, the summer vacation season, the average purchase price increased by more than 28.0%. This was the result of increased sales in home appliances, furniture, kitchen appliances, and luxury goods. Sales of household goods and luxury items grew for nine months except for February and March. Especially during the vacation season, as overseas travel was impossible, more people spent their saved travel funds on luxury goods and household items. The increase in compensatory consumption to relieve suppressed consumer desires due to COVID-19 was also influenced by department stores launching overseas luxury discount events. Luxury goods sales from June to September surged by more than 22.0% compared to the same period last year, with July’s sales growth rate soaring to 32.5%. Large supermarkets also saw increased sales of home appliances in non-food categories this year. However, overall sales declined as food sales, which account for more than 60% of sales, remained sluggish in the first half of the year.

The retail industry has begun streamlining offline operations this year in response to these changes in consumer patterns. In particular, Lotte Shopping, the number one player in the retail industry, announced plans to close 200 out of 700 offline stores including department stores, marts, supermarkets, and home appliance specialty stores within five years. Accordingly, this year, over 100 stores including department stores, supermarkets, and LOHB’s were closed. Homeplus also shut down four stores this year. Emart, which restructured underperforming businesses last year, announced plans to renew 30% of its 140 stores this year and has been renovating nine stores including Wolgye, Gangneung, and Chuncheon branches.

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