SEOUL, Oct. 21 (Korea Bizwire) — The annual Korea Sale FESTA (KSF), which has failed to gain popularity among manufacturers and consumers in the past, faces another challenge this year.
Department stores have reported that they will not take part in the event this year.
The KSF is a nationwide shopping festival involving major retailers, manufacturers and traditional markets to attract foreign travelers and boost domestic consumption.
But department stores are baffled by the Fair Trade Commission (FTC)’s recent revision of regulations to have retailers pay at least 50 percent of the discount when they hold sales events.
The Korea Department Store Association says it will inevitably be passive about the KSF, which will start on November 1, as losses would be significant if the guidelines are implemented as the FTC’s revision suggests.
Since the association is a gathering of major Korean department stores such as Lotte, Hyundai and Shinsegae, the event is likely to become an empty platform if the five major department stores do not attend the KSF.
The KSF, which is an initiative of the Ministry of Trade, Industry and Energy, has constantly been criticized over its effectiveness. The KSF is considered unsuitable for the country’s distribution environment.
Black Friday in the U.S. is an event started by department stores to deplete stock of products purchased directly by the department stores.
It is possible to offer big discounts because retailers are burdened with inventory themselves.
Local department stores, however, do not have much room for discounts as they are taking a kind of business approach similar to the real estate industry that borrows sales venues and receives commissions.
There are also differences in discount items. If popular items on American Black Friday are home appliances and digital devices, fashion products are most popular during Korean sales events.
“(Even if the company does not participate in KSF), most retailers have large sales volumes during the winter season,” an industry source said.
Ashley Song (firstname.lastname@example.org)