South Korean retailers and fashion outlets are seeing record-breaking sales during their big discount events this month, but industry watchers said the results do not signal a long-awaited recovery in consumer sentiment.
The sales rebound displayed a typical consumer spending pattern during an economic downturn: closing wallets in everyday life, but opening them wide for cost-effective items, they said.
FASHION OUTLETS
Musinsa, a leading street fashion platform, sold 50 billion won ($39 million) worth of products on Nov. 23, the first day of its biggest discount event of the year. That means it sold at least 33 million won worth of items every minute on the day.
This was a whopping 42% surge from the 33.8 billion won in sales it recorded on the first day of last year's Black Friday sale period.
A Starfield shopping mall in Anseong, Gyeonggi Province Samsung C&T Co.’s fashion division logged a 70% jump in sales during its Nov. 13-22 Black Friday sale period, compared to the previous year.
Sales at E-Land Mall shot up 70% on-year from Nov. 20, when it launched the off-sale event, to Nov. 22, versus the sales it recorded during the first two days of last year's event.
RETAIL OUTLETS
Shinsegae Inc., South Korea’s largest retailer, raked in 1.7 trillion won in sales during the one-week discount event that ran through Nov. 19.
The figure is a sharp increase from the 960 billion won it reported in 2021 during its Black Friday week-long sale.
“Sales across our online platforms rose significantly, including SSG.Com by 31%, Gmarket by 10%, Shinsegae Live Shopping by 34% and W Concept by 161%,” said a Shinsegae Group official.
Sales at E-Mart Inc., Shinsegae’s supermarket chain operator, spiked 22% during the Black Friday period, compared to the equivalent period last year.
Home appliances such as TVs and refrigerators drove its sales higher, as well as processed foods, thanks to steep discounts offered on those items.
Hypermarket store operator Homeplus performed well, led by grocery sales, since it offered big discounts on Nov. 9. Particularly, lobster sales skyrocketed 673% on-year during the Nov. 17-19 off-sale period.
A Homeplus outlet in Seoul However, industry watchers said that after the off-sale period ends, consumers will likely return to frugality due to the persistent high inflation and economic slowdown.
“Consumers who purchased winter clothing this month are likely to cut their spending from the end of this year to early next year,” said a department store official.
Department stores in the country derive more than half of their sales from clothing.
By comparison, large supermarkets plan to continue to offer discounts on consumer staples until the beginning of next year.
MARGINS
Now Korean retailers are returning their focus to improving margins.
“Even if we sell at a discount, we have to make a margin, so we are in close discussions with major suppliers about discount items and their prices,” said a large supermarket chain official.
“We still need to offer bait products, but we are focusing on sourcing high-margin products.”
Write to Ji-Yoon Yang, Mi-Kyoung Lee and Dong-jin Hwang at yang@hankyung.com
