SEOUL, Sept. 11 (Korea Bizwire) – South Korean retail businesses are on a collision course with the government following a series of regulations recently imposed on an already struggling industry amid a long-term national economic slump.
Hit by a lack of consumer confidence and sluggish economic growth, the retail industry is decrying new regulations put in place by the Moon administration as a ‘further hindrance’, putting the government in a difficult position to appease business owners at traditional local markets and respect the freedom of consumers.
According to Statistics Korea, retail sales at department stores, which have long been thought of as the pillar of the country’s retail industry, dropped 1.5 percent on-year in January.
In February and March, sales dropped 5.6 and 3.5 percent, respectively, compared to the same time a year ago.
While the downward trend continued in April and May, Lotte Department Store, one of the major department store chains in the country, suffered a drop in sales growth for six months between January and August.
It’s the first time the country’s largest department store chain has suffered a sharp fall in sales since the IMF Crisis 20 years ago.
Similarly, Hyundai Department Store experienced a sales drop in five of the last eight months.
Though to a lesser degree, growth in the supermarket industry began slowing down around 2010 when new regulations were put in place, with annual sales remaining at around 39 trillion won between 2013 and 2015, according to the Korea Chainstores Association.
Reflective of the weak market sentiment, industry-leading supermarket chain E-Mart has revealed no plans to open new stores this year, the first time since the company’s launch 24 years ago.
Influenced by the Chinese retaliation over THAAD missile-defense systems in the country and aggressive behavior from North Korea, many in the industry argue the government’s policy on retail businesses is heading in the wrong direction.
“While the economy is slowing down, with many retail stores reporting poor sales, the government continues to put out hardline regulations.
While encouraging others to create job opportunities, the government’s policy is ironically designed to make jobs disappear.
However, KBIZ, a group that represents small and medium-sized business owners, continues to support the measures and push the government to protect the rights of shopkeepers at local markets, while calling for caps on opening hours and days to be implemented on all major retail stores.
With groups representing local residents showing signs of taking action against the government, which many feel has been focusing far too much on the rights of small market business owners, the South Korean government is expected to rise to the occasion and find common ground for both consumers and vendors at traditional markets.
Ashley Song (email@example.com)