[Opinion] Generational Change and Live Commerce

Professor Seoyonggu, Department of Business Administration, Sookmyung Women's University

The distribution industry is undergoing rapid changes. With the prolonged COVID-19 pandemic, the era of contactless (untact) has begun, and the negative growth of large offline retail stores, which represent Korea's offline retail industry, is worsening. In the second quarter of this year, Emart and Lotte Mart posted deficits of 47.4 billion KRW and 57.8 billion KRW respectively, with losses widening compared to the second quarter of 2019. The duty-free industry is facing a crisis level of collapse due to a sales decline of over 90% compared to last year. On the other hand, major e-commerce companies such as Naver Shopping and Coupang are reported to have increased their sales by more than 30% compared to last year. As untact shopping has fully established itself as the mainstream in retail during the COVID-19 era, pessimistic views have emerged suggesting the end of offline retail.

In the distribution industry, innovation means building new stores and logistics warehouses that differentiate from existing ones. Just as new products are developed in manufacturing, in retail, opening new stores and in logistics, operating new logistics centers are the driving forces for industry development. However, regulations on operating hours and store openings for large stores have persisted for 10 years, preventing an environment where new store experiments or openings can take place. Meanwhile, population decline has begun, and the Korean consumer market has shifted to a new normal situation. In this context, offline businesses have also seen the emergence of new sales channels that can respond to e-commerce. This is live commerce. Interpreted, it can be translated as "living and moving commerce," as if it has a living, breathing life.

Live commerce is an online commerce method that introduces and sells products through real-time video streaming on platforms such as websites or applications. It is a new sales channel that combines TV home shopping and real-time streaming. It allows real-time communication with viewers through chat windows, gaining popularity among the 20s and 30s age group and rapidly growing. The special situation of being confined at home created momentum for the rapid growth of such real-time live shopping broadcasts. Originally, live commerce began to gain attention after Alibaba Group's "Taobao Live" started broadcasting in China after 2016. It rapidly grew with the power of Wanghong (Chinese influencers) and is already recognized as another retail channel in China. In the U.S., Amazon launched "Amazon Live" in 2019, pioneering various categories such as fashion, beauty, cooking, childcare, and home furnishing. In Korea, Kakao started "Kakao Shopping Live" in the first half of this year, and Naver's "Shopping Live" introduces products from small and medium merchants through real-time chat. Lotte Department Store also started the "100 Live" broadcast.

Live commerce is a form of co-creation between consumers and producers. When sellers share detailed product information through broadcasts, viewers exchange opinions immediately via comments. Viewers can purchase instantly by clicking the "Buy" button. This characteristic of live commerce shines amid the massive generational shift currently underway in the Korean consumer market. It has been able to target the tastes of the millennial generation born after 1980 and the subsequent MZ generation born after 1995. Unlike the "sensitive generation" of their predecessors, the MZ generation is a practical consumer who pursues self-satisfaction, has distinct individuality and tastes, and is adept at real-time evaluation and feedback. The scope of live commerce, characterized by "creativity" and "immediacy," is expected to continuously expand from fashion and cosmetics to housing and healthcare sectors.