Prolonged Monsoon Keeps People Indoors... Mixed Fortunes in the Retail Sector

Due to the influence of moisture from the monsoon front and a typhoon, most regions nationwide experienced rain on the 6th. Commuters are hurrying their steps at Gwanghwamun Intersection in Seoul during the morning rush. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Seungjin Lee] The prolonged monsoon season over the past few weeks has brought mixed fortunes to distribution companies. The government attempted to stimulate consumption, which had stagnated due to the COVID-19 pandemic, by providing emergency disaster relief funds, but offline retailers are struggling as the monsoon season coincides with the vacation period. On the other hand, as people spend more time at home, sales for home shopping and online shopping malls have increased.

◆ Convenience stores and department stores see a sharp drop in customers due to the monsoon ＝ According to the distribution industry on the 8th, sales at convenience stores in major tourist destinations have been halved recently. Normally, convenience stores would be bustling with customers looking for beer, ice cream, and other items, but continuous heavy rain has caused customer visits to plummet.

In fact, for brand A convenience stores, sales at stores located on the west coast during last week (July 27 to August 2) all decreased compared to the previous year. Sales at convenience stores in Daecheon, Anmyeondo, and Taean areas dropped by 43.1%, 38.6%, and 34.2%, respectively. Brand B convenience stores showed a similar trend. Sales at representative stores in the west coast region fell by 30% compared to the same period last year. By product category, sales of summer items such as ice, carbonated drinks, and ice cream plunged by 41%, 31.2%, and 35.6%, respectively.

Sales at major offline stores are also slowing down. Consumers are reluctant to go shopping outdoors, and the continuous bad weather has led to reduced spending on clothing and other items. Lotte Department Store's sales last week (July 27 to August 2) decreased by 9% compared to the same period last year (July 29 to August 4), when there was no rain. By category, miscellaneous goods including sunglasses and bags saw the largest drop at 26% compared to last year. Food, women's clothing, and men's clothing sales also fell by 22%, 20%, and 12%, respectively.

◆ Online holds steady despite consumption slump = Amid the overall weakened consumer sentiment due to the monsoon, online sales maintained a stable upward trend. According to SSG.com, sales from SSG Delivery last week increased by 10% compared to the same period the previous month (June 22 to 28). It appears consumers preferred online grocery shopping over visiting marts in bad weather. For dawn delivery, there was little difference before and after the monsoon due to limited capacity at logistics centers, but the operation rate remained around 85%.

Some products benefited from the monsoon season. At Lotte Department Store, sales of home appliances increased sharply by 32% compared to the previous year. This was due to more consumers seeking dehumidifiers and dryers in the humid weather. At Electronic Land, air conditioner sales in July decreased by 30% compared to last year, but sales of dryers and dehumidifiers rose by 48% and 20%, respectively, during the same period. Clothing care appliances increased by as much as 388%.

◆ Cloudy skies, but home shopping is 'clear' = The home shopping industry, which recorded strong performance in the first and second quarters of this year due to the expansion of non-face-to-face consumption culture, is expected to maintain good results in the third quarter as well. Despite the traditional off-season summer period, home shopping sales have increased as the prolonged monsoon has led people to spend more time at home.

From July 27 to August 3, during heavy rain, Hyundai Home Shopping's transaction volume increased by 24% compared to the same period last year. GS Shop and CJ ENM O Shopping division (CJ O Shopping) also grew by 10% and 12%, respectively. Lotte Home Shopping saw a 20% increase in total order quantity compared to last year. T-commerce company Shinsegae TV Shopping's transaction volume surged by 157%.

It is analyzed that quickly responding to weather changes and adjusting product lineups was effective. Home shopping channels focused their broadcasts on selling humidifiers, dehumidifiers, and household goods instead of typical summer items like sunglasses and dresses.

Hyundai Home Shopping increased the lineup of dryers and air conditioners by 10% compared to last year. Samsung dryers sold on the 1st recorded broadcast sales of 1.1 billion KRW, achieving more than double the sales target. Also, Winix dehumidifiers sold by CJ O Shopping on July 31 received orders more than three times the target within 32 minutes of the broadcast start.

Sealed containers also sold like hotcakes. Sales of sealed container products sold by Shinsegae TV Shopping during the monsoon period increased by 131% compared to the same period last year. This was due to increased customer demand for keeping food fresh amid the persistent humid weather.

Lotte Home Shopping, facing sluggish summer fashion sales due to the prolonged monsoon, quickly started selling new autumn products and saw positive results. Additionally, an unusual phenomenon occurred during the first broadcast of vehicle rental product sales, with 8,000 consultations flooding in. This surge in inquiries was attributed to more male customers watching TV at home due to the monsoon.

A home shopping industry official explained, "A typhoon is forecast for September, so the sales increase effect due to weather is expected to continue."