"Sales Seemed to Rise, But..." ... Retail Industry Hit Hard by 'Level 4 Social Distancing' Sudden Blow

Department Stores and Marts Revived by Revenge Spending and Donghaeng Sale
Convenience Stores' Night Sales Also Affected... Peak Season Hotel Industry on Alert

[Asia Economy reporters Jo In-kyung and Kim Yuri] Consumer sentiment, which had been stagnant for over a year, has slightly revived this year due to the influence of 'revenge consumption.' However, retail companies that barely caught a breath through various discount events such as the 'Korea Together Sale' in late last month are now distressed by the news of strengthened social distancing measures.

Effectively a Stay-at-Home Order, Significant Impact

The government’s decision to raise social distancing in the metropolitan area to Level 4 starting from the 12th has left the retail industry bewildered. There are concerns that foot traffic will sharply decline due to social distancing measures that are close to a de facto stay-at-home order.

A department store industry official explained, "Typically, sales from 6 p.m. until closing (8:30 p.m.) account for about 8-10% of daily sales. With remote work and restrictions on evening public transportation reducing outings, and if restaurant access after 6 p.m. is also limited, department stores will see a visible drop in customer numbers and sales impact starting just 2-3 days later."

Large supermarkets are also worried that their operating hours will lead to a sharp decrease in store visitors. A large supermarket official said, "The problem is not just the one-hour reduction in operating hours, but that customers are not visiting the stores at all. Online delivery volumes have increased over the past few days, and same-day delivery is closing earlier than usual," he added.

Convenience store nighttime sales will also be affected. A convenience store industry official said, "During summer nights, sales of alcoholic beverages and snacks are significant, but with many places restricting in-store parasol dining and outdoor drinking, store owners in university areas and tourist spots are expected to face considerable difficulties."

Hyundai Department Store Trade Center Branch decided to close from the 7th to the 12th. Not operating for a week is expected to result in sales losses of at least 10 billion KRW.

A department store official said, "After going through the worst period last year and seeing some sales recovery from the second quarter, this is like a complete thunderbolt. Consumer sentiment is shrinking again, and damage to second-half performance is inevitable."

The hotel industry, preparing for the peak vacation season, is also on high alert. Starting from the 12th, only two-thirds of all rooms can be operated, forcing some customers to be notified of cancellations. Even customers who chose nearby hotel stays instead of distant trips are now facing difficulties in room availability.

An official from a luxury hotel in Seoul said, "Some places have over 90% reservations on weekends, so cancellations are unavoidable. After last year’s sudden government directive forced us to cancel fully booked year-end reservations, we have prepared guidelines, so we plan to notify booked customers immediately once internal reviews are completed."

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