Selective Investment Needed in Distribution Sector and Online Companies

[Asia Economy Reporter Junho Hwang] Korea Investment & Securities presented an overweight opinion on the retail sector outlook for next year on the 3rd.

First, selective investment in online companies is deemed necessary. As of November 2021, major retail companies' sales increased by 9.6% compared to the same month last year. Offline sales rose by 4.6%, while online sales grew by 14.8%. In particular, department store industry sales were favorable due to the With-Corona policy. On the other hand, discount store industry sales were sluggish. Since the With-Corona policy continued until mid-last month, it is highly likely that the discount store industry's sluggishness persisted.

Based on the sales trends of major retail companies, the online market size has surpassed offline. South Korea is a representative country with a high online penetration rate, and next year, the online penetration rate is expected to reach 40.4% (+2.8%p), with a market growth rate of 12.9% (-7.8%p).

Myungjoo Kim, a researcher at Korea Investment & Securities, stated, "Next year, three companies engaged in online food businesses are scheduled to be listed," adding, "Considering the high online penetration rate and the beginning slowdown of market growth, selective investment is necessary."

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