First Round of Consumption Coupons Shows Pronounced Impact on Small Businesses and Non-Metropolitan Areas

Sales Improvement Amid Sluggish Consumption

The first round of consumption coupons distributed in July last year was found to have improved sales, particularly among small business owners, despite overall constrained consumption conditions. The effect was especially pronounced in regions outside the Seoul metropolitan area, where consumer spending capacity is relatively limited.

On March 16, Han Sunyoung, Associate Research Fellow at the Korea Small Business Institute, released a report titled "The Impact of Consumption Coupon Policies on Revitalizing Consumption: Focusing on Small Businesses and Regional Differences." The first round of consumption coupons was distributed nationwide to address sluggish domestic demand and a downturn among self-employed business owners. The policy was designed to channel consumption primarily toward small business owners by limiting eligibility to certain industries and businesses below a set sales threshold.

The report analyzed weekly card sales data from approximately 2.49 million BC Card-affiliated small business merchants, assessing changes in sales before and after the coupon distribution. The analysis found that, while overall card sales continued to decline after the distribution, the rate of decrease moderated to 4.21%, compared to a 6.79% drop before the coupons were issued. Notably, in industries where coupon use was permitted, the sales growth rate increased from 2.03% before distribution to 4.40% afterward.

An analysis by sales volume revealed that businesses with annual sales of 500 million won or less saw the largest improvement in card sales growth, with a 5.99 percentage point increase. This indicates that the sales improvement effect of the consumption coupons was more pronounced among smaller businesses. In everyday sectors such as restaurants, supermarkets, and beauty salons, both sales improvement and coupon usage ratios were observed in the 5% to 18% range, suggesting that the policy had an impact on daily consumer spending.

Regionally, the effect of the consumption coupons was greater outside the Seoul metropolitan area. Daegu recorded a 4.10 percentage point increase in sales, and Gwangju posted a notable 16.93 percentage point rise—the highest among all regions. This demonstrates that the policy effects were more visible in areas with relatively limited spending power. By contrast, the increases in the metropolitan area were more modest: Seoul (1.74 percentage points), Incheon (1.22 percentage points), and Gyeonggi Province (0.84 percentage points).

Han Sunyoung, Associate Research Fellow, stated, "These findings suggest that cash-based consumption promotion policies can lead to tangible improvements in sales among groups and regions with limited spending power. In particular, the clear sales improvement effect among small business owners and in regions with relatively small economies highlights the importance of tailoring policy design to the characteristics of target groups when planning for domestic demand recovery in the future."

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