SEOUL, Oct. 31 (Korea Bizwire) – South Korea’s grand sale festival this year is likely to end without the luster of past years despite its growth in size, due in part to the depressed sales caused by a long holiday and drop in Chinese shoppers, retail industry sources said Tuesday.
The Korea Sale Festa began on Sept. 28 for a 34-day run and involved 446 businesses this year, a sharp gain from 92 in 2015. The name of the annual event was changed to its current form last year from Korea Black Friday.
Department stores and retail chains said they weren’t seeing meaningful growth in sales this year. As of Oct. 15, Lotte Department Store estimated a 1.6-percent increase. Sales of foods jumped 29.7 percent while those for men’s apparel rose 4.5 percent, but fell 1.5 percent for women’s clothes and 3.1 percent for accessories.
Hyundai Department Store counted a 4.3-percent fall in sales. Shinsegae Department Store marked a 9.8-percent increase, but industry officials say much of the gain has to do with its business expansion of a key branch in southern Seoul rather than the effects from the sales festa.
This year’s bargain period was eclipsed by the Chuseok (harvest moon) holiday, normally observed for three days but extended to 10 days this year from connecting weekends and a bridge holiday. Over 1 million South Koreans traveled overseas during the period, taking out much steam in local shopping.
Chinese tourists, the big spenders who for years fueled growth in South Korea’s retail business, did not show up this year as diplomatic tension between the two countries has not yet been resolved. Beijing restricted its travel agencies from operating package tours to South Korea to protest the latter’s decision to host a U.S. anti-missile defense system.
Last year, some 280,000 Chinese travelers had come to South Koreaduring the festa, contributing more than 60 percent to entire sales.
Auto sales met the target, but overall business was unremarkable, according to the officials. Hyundai Motor and its sister firm Kia Motors were able to sell the 12,000 vehicles they put out for this year. The figure, however, is below what they sold last year when the companies received additional orders.
Some officials say South Korea’s price cuts for the festa are still too small. Compared to Black Friday in the U.S., where the discount rate is close to 90 percent, the rate in South Korea is mostly between 10 to 30 percent. Most of the traditional markets were excluded from the festa as the event concentrated on department stores, duty-free shops and large retail chains, they said.
“The number of customers was smaller than expected because many left for abroad as the sales festa coincided with the Chuseok holiday,” an industry official said. “Government advertisement of the event fell short, too, leaving many unaware of the event.”