'Corona Economic Shock' Last Year Seoul Store Sales Decreased by 9 Trillion Won

Store Sales Temporarily Rise During Emergency Disaster Relief Fund Distribution but Overall Shock Mitigation Insufficient
Online Consumption Increases by Over 4 Trillion Won... Larger Decline Among Lower Sales Businesses Raises "Polarization Concerns"
Citizen Social Distancing Leads to Largest Drop in Living Population and Subway Ridership During 3rd Wave
Seoul City Releases Big Data Analysis Results

[Asia Economy Reporter Lim Cheol-young] One year after the first confirmed case of COVID-19 in South Korea, citizens' participation in social distancing shone brightly, but it was revealed that the economic impact on the local economy was significant.

On the 10th, the Seoul Metropolitan Government announced that an analysis of big data derived from eight organizations including Shinhan Card, Korea Credit Bureau (KCB), and Seoul Institute showed that last year, sales at stores in Seoul decreased by 9% (about 9 trillion KRW). Annual store sales in Seoul usually concentrate during peak seasons such as the Lunar New Year holidays and the start of the school year in February to March, summer vacation and Chuseok in August to September, and year-end, but last year, these periods coincided with the large-scale COVID-19 outbreak, resulting in a greater decline in sales.

The most severe gap occurred at the end of the year, when the third wave of the pandemic became a reality, with sales during this period dropping by about 700 billion KRW (-34%) compared to the previous year. Although sales increased compared to the previous year during the early May holidays and the distribution of national emergency disaster relief funds, it was insufficient to prevent the overall sales shock.

By industry, the food service sector suffered severe sales damage with Korean food at 2.6 trillion KRW, other dining at 1.1 trillion KRW, Western food at 400 billion KRW, and Chinese food at 200 billion KRW. Sales in sectors such as academies and clothing also fell by more than 15% compared to the previous year. Leisure-related sectors such as duty-free shops and travel agencies, as well as entertainment bars, saw sales drop by more than 50% due to social distancing. In particular, duty-free shop sales plummeted by 82.4%, with a sales decrease amounting to 220 billion KRW. On the other hand, sales in health-related sectors such as general hospitals and pharmacies, as well as butcher shops, discount stores, and convenience stores, increased.

The degree of economic shock varied by commercial district. Assuming 2019 sales as '1', the average sales by major commercial districts showed that tourist districts such as Itaewon and Insadong, and university districts such as Hongdae and Ewha Womans University experienced relatively large sales impacts, while local commercial districts like Munjeong Station and distribution districts like Euljiro 3-ga performed relatively well.

The average sales in major tourist commercial districts such as Myeongdong, Itaewon, and Jamsil Lotte stood at 71% compared to the previous year, while university districts like Hongdae and Ewha were at 74%. Ten commercial districts classified as local commercial areas, including Gaebong Hyundai Apartment and Dosan Park, recorded 89% compared to the previous year, and distribution districts such as Yangjae Station and Yeongdeungpo Station recorded 90%.

The distribution of store sales also varied by district. The districts most severely impacted in terms of sales decline were Jung-gu (-19%) and Jongno-gu (-14%), where major public institutions and headquarters are concentrated; Seodaemun-gu (-18%), which has a concentration of university districts; and Yongsan-gu (-15%), which includes Itaewon. In contrast, districts with dense residential areas such as Jungnang-gu (-3%), Yangcheon-gu (-4%), Gangdong-gu, and Eunpyeong-gu (-5%) experienced relatively smaller declines in sales.

With the normalization of non-face-to-face daily life, online consumption increased by more than 4 trillion KRW compared to the previous year. Seoul citizens' credit card consumption decreased by about 3% (35 trillion KRW decrease) compared to the previous year, which was relatively small considering that store sales decreased by more than 9 trillion KRW. The monthly average increase in online shopping transactions, which was 23% in 2019, rose to more than 36% monthly last year.

Based on this big data analysis, the Seoul Metropolitan Government expressed concerns about the 'polarization' caused by COVID-19. An analysis of credit information for businesses operating for more than four years (about 310,000) showed that the sales decline rate compared to the previous year was greater in the bottom 30% of sales than in the top 30%.

The Seoul Metropolitan Government explained, "Large-scale businesses were able to recover quickly from the social distancing shock, whereas small businesses found it difficult to adapt to rapidly changing circumstances such as the transition to an untact (contactless) environment. The age of business owners in the bottom 30% sales category was relatively higher, with a larger proportion aged 60 and above, and their business duration was over 10 years, indicating a possibility that they may not actively respond to changes triggered by COVID-19."

The active participation of Seoul citizens in the social distancing campaign was also confirmed by numbers. During the third wave of the pandemic in December last year, the resident population in Seoul decreased by up to 7.4% due to reduced inflow from outside Seoul. While the resident population in downtown areas decreased due to the decline in foreign tourists and the normalization of telecommuting and social distancing, the population in suburban areas relatively increased.

By district, the resident population change rate showed that Jung-gu, a business and commercial area, decreased by 30% on weekdays and 39% on weekends, whereas districts with dense residential areas such as Gangdong-gu, Eunpyeong-gu, and Jungnang-gu saw slight increases in resident population. Notably, the movement of residents between districts within Seoul decreased by up to 44,000 people, and public transportation usage also decreased by up to 41%, with an average decrease of 27%.

Public transportation users also declined. Comparing subway ridership between 2019 and 2020, ridership after COVID-19 decreased by 27% on average and up to 41% at maximum compared to the previous year. In December last year, the third wave of COVID-19 led to a new record for the highest decrease in public transportation users, surpassing the previous maximum decrease of 39% recorded in March.

Lee Won-mok, Director of Smart City Policy at Seoul Metropolitan Government, said, "Thanks to citizens' participation in social distancing, we were able to relatively quickly manage a crisis that could have spread more widely. We will prioritize livelihood stability through scientific administration, including establishing post-COVID policies based on data."

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