[Financial Essay] Which Industries Saw Sales Increase Despite COVID-19?

On the 22nd, the stairs of Sejong Center for the Performing Arts in Jongno-gu, Seoul, were wrapped with the phrase "Thank you to the medical staff working hard to prevent the spread of COVID-19!" / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Min-young] Despite the severe impact of the novel coronavirus disease (COVID-19) on South Korea's economy, some industries have seen increased sales. Pharmacies, where people lined up to buy masks, and consumption for 'home cooking' (home + cooking) has surged as remote work and cooking at home became more frequent. Orders shifted to online shopping, but offline stores experienced mixed fortunes depending on their size and proximity to residential areas.

Hana Financial Management Research Institute recently released a report titled "Changes in Consumer Behavior Brought by COVID-19." This report analyzed personal credit card sales data from Hana Card.

According to the report, internet shopping sales in the first quarter of this year surged by 41% compared to the same period last year. This was due to a decline in offline consumption and a significant increase in contactless (untact) shopping sales amid the spread of COVID-19. During the same period, home shopping sales also rose by about 19%.

Pharmacy sales increased by 15% in the first quarter due to a surge in visits for public mask sales and other reasons.

Bicycle store sales also increased by 45%. This is because people avoided indoor exercise facilities like fitness centers due to fears of infection but increased outdoor exercise. Additionally, there is an interpretation that the number of 'Jachuljok' (office workers commuting by bicycle) increased as people avoided public transportation where close contact with strangers is possible.

Some industries unexpectedly enjoyed a boom. During the same period, plastic surgery clinic sales rose by 9%, and imported new car sales increased by 11%. It is interpreted that the 'For Me Jok' (people who invest boldly in products that hold personal value) unleashed suppressed consumption due to COVID-19 on themselves.

On the other hand, industries involving going out and gathering in groups were directly hit by COVID-19.

With air travel completely blocked, travel industry sales in the first quarter dropped by 59% compared to the same period last year. Airline sales were also halved. As people could not travel abroad, duty-free store sales decreased by 52% compared to the same period last year. Especially in March, when COVID-19 peaked, sales dropped by 88% compared to the same month last year.

Movie theater and theme park sales also plunged by 57% and 53%, respectively. This was the result of leisure activities that were easily done being blocked.

Consumption related to outdoor activities also sharply declined as people stayed indoors. Sales in academies, entertainment, and restaurants saw significant decreases.

Martial arts dojang and academies saw March sales drop by 85%, arts and physical education academies by 67%, foreign language academies by 62%, and entrance exam and tutoring academies by 42% compared to the same month last year. Karaoke rooms and entertainment bars also saw sales decrease by 50% and 39%, respectively.

As dining out decreased, March sales in restaurant sectors with a relatively high proportion of self-employed operators, such as Korean food (-32%), Chinese food (-30%), Japanese food (-38%), and Western food (-38%), also declined.

Outlet stores (-31%), home appliance specialty stores (-29%), department stores (-23%), and large supermarkets (-17%) also saw sharp declines in offline shopping sales.

However, convenience stores (6%), supermarkets (12%), butcher shops (26%), and agricultural product stores (10%) located relatively close to residential areas saw sales increases. The research institute attributed this to the spread of the home cooking phenomenon, where people purchase ingredients and cook at home.

While bar sales decreased, sales at liquor specialty stores increased by about 20%, which was explained as part of the 'home drinking' phenomenon where people drink at home.

The report stated that considering the average growth rate of credit card usage since 2004, the net decrease in credit card sales in the first quarter is estimated to be around 16 to 18 trillion won (excluding check cards and corporate cards).

There are some regional differences, with Daegu city experiencing the largest decrease in card sales in the first quarter at -17.9%. This was followed by Busan (-16.8%), Incheon (-15.7%), Jeju (-14.6%), Seoul (-13.5%), Gyeonggi (-12.5%), and Gyeongbuk (-11.9%).