Low-priced chains, franchises soar in gross sales
By Ko Dong-hwan
Sole proprietors in Korea are closing their companies at a report charge as the continued recession is driving shoppers to spend much less and go to companies that supply cheaper options, market observers stated Thursday.
The development is obvious within the piles of furnishings and kitchen gear discarded by closed companies, together with a decline in card funds throughout Korea’s main business districts.
Information exhibits that Korea is dealing with its worst shopper market in a decade, much more difficult than the interval from 2020 to 2022, when the COVID-19 pandemic impacted the financial system.
In the course of the second quarter, over 15,800 companies shut down in Seoul alone, about 20 p.c increased than the typical throughout the pandemic interval.
In response to the Nationwide Tax Service, over 986,000 companies closed final 12 months, the very best determine ever recorded within the nation’s statistics. In comparison with the earlier 12 months, this was a 13.7 p.c bounce — additionally the biggest bounce ever recorded.
Eating places have been notably notable within the information. Out of 790,000 registered eating places within the nation, 153,000 closed their doorways final 12 months, practically matching the 159,000 that opened throughout the identical interval.
In response to Rep. Park Sung-hoon of the ruling Folks Energy Get together, out of 11.46 million personal enterprise operators who filed tax returns in 2022, 75 p.c reported that they earned lower than 1 million received ($755) per 30 days on common.
Statistics Korea stated the variety of sole proprietors in July was 5.72 million, down by 62,000 from the earlier 12 months and a discount in six consecutive months.
The general card cost data in Seoul’s key business sectors present that extra shoppers are spending lower than earlier than. In response to market tracker Nicezinidata, 15 out of the town’s 30 largest business markets have seen a year-on-year lower in card funds.
The neighborhood of Hongik College noticed a 51 billion received decline, whereas the Sinsa space noticed a drop of 40.2 billion received, the Sillim space recorded a lower of 37.8 billion received, and the Gangnam space of 24.5 billion received.
These figures stand in stark distinction to the earlier 12 months, when 29 out of the 30 hotspots skilled year-on-year will increase.
An space in Seoul’s Jung District, Hwanghak-dong, identified for its secondhand furnishings and kitchen provide sellers, can be witnessing the indicators of recession.
Lots of the secondhand furnishings sellers within the space stopped bringing in new gadgets as they’re seeing a lower in gross sales. Some stated their gross sales have dropped to one-third of their gross sales throughout the COVID-19 pandemic.
“We have been promoting used furnishings since 1987, however I’ve by no means seen a worse 12 months,” one of many sellers stated. “Greater than 10 sellers have closed for good. We’re additionally shutting ours down this month.”
Amid the recession, retail chains and franchise corporations identified for reasonably priced costs have seen hovering gross sales.
Daiso, a dollar-store chain, final 12 months noticed 3.41 trillion received in gross sales and achieved an working revenue of 261.7 billion received. The corporate has by no means seen its gross sales over 3 trillion received earlier than.
Japanese-style pub, or “izakaya,” franchises that supply drinks at an reasonably priced worth, with some providing a pint of beer for just one,900 received, have turn into in style as properly. A few of these franchises established lower than a 12 months in the past have already seen the variety of their franchisees attain 160 in numbers in six months or 170 in 9 months.