"Platform Competitiveness" Will Determine the Future Success of Distribution Companies

KCCI's '2021 Retail Industry Outlook Seminar' to be Held on the 26th
Analysis of This Year's Performance and Next Year's Outlook by Retail Channel

[Asia Economy Reporter Changhwan Lee] The Korea Chamber of Commerce and Industry announced on the 26th that it held the ‘2021 Distribution Industry Outlook Seminar’ at the Namdaemun Chamber of Commerce Building in Seoul to review this year’s distribution market and forecast next year’s market by business type.

Kim Yeonhee, Head of Distribution at Boston Consulting Group (BCG), said in the keynote speech, “This year, the online distribution market grew five years’ worth at once due to the impact of the novel coronavirus disease (COVID-19),” adding, “We have now entered the online distribution 3.0 era, centered on fresh food, fashion, and beauty products, which were previously thought to be ‘items that must be seen in person before purchase,’ moving beyond the online distribution 2.0 era focused on daily necessities.”

Kim Yeonhee, Head of Distribution, said, “In the post-COVID era, significant upheavals are expected in the distribution industry. To dominate the market in the future, distribution companies will need platform competitiveness rather than traditional distribution competitiveness such as sourcing and promotions,” and advised, “Especially offline distribution companies need to adapt to new trends through response strategies such as store restructuring, M&A, and collaboration.”

Following the keynote speech, presentations on this year’s market analysis and next year’s issue forecasts were made by distribution channels such as online distribution, large discount stores, and convenience stores.

First, Professor Dongil Lee of Sejong University, who presented on online shopping, stated, “Since 2001, online shopping transaction volume has increased by an average of 19% annually, leading retail market growth,” but added, “However, online shopping, which has now entered a mature phase, is showing signs of slowing growth.”

Regarding next year’s online distribution market, Professor Lee forecasted, “Competition within the industry will intensify further with Amazon’s entry into the domestic market and IT companies based on portals and messengers entering the market,” and predicted, “The process of differentiation within the industry based on companies’ competitive capabilities such as customer information, logistics, and product assortment is expected to become more active.”

Large Discount Stores, Department Stores, and Convenience Stores Expected to Continue Growth Next Year

Next, Lee Kyunghee, Director of Emart Distribution Industry Research Institute, in her presentation on large discount stores and department stores, said, “Large discount stores are expected to grow by 3.3% this year as home dining became routine due to COVID-19 and food sales increased,” while “department stores are expected to shrink by -10.4% this year due to a sharp decline in store visitors.”

Director Lee predicted that next year large discount stores will “continue their growth by strengthening the food sector reflecting the home cooking trend, transforming stores into delivery bases, and reinforcing online-offline linkage,” and that department stores will “grow by 3.0% next year, supported by gradual improvement in store visitors after the COVID-19 situation calms down, continued high growth in luxury and living sectors, and strengthening of live commerce.”

Yeom Kyuseok, Vice Chairman of the Convenience Store Industry Association, who presented on convenience stores, said, “This year, the convenience store industry is expected to record a growth rate in the 3% range, supported by the increase in single-person households and rising demand for fresh food and HMR (Home Meal Replacement),” emphasizing, “The industry keywords for 2021 can be summarized as FAST: Food, Alone (single-person households), SGDs (Sustainable Growth and Development), and Tech (technological innovation). Neglecting proactive innovation to respond to rapidly changing trends will jeopardize sustainable growth.”

Seo Deokho, Director of the Korea Chamber of Commerce and Industry Distribution and Logistics Promotion Institute, emphasized, “The emergence of a new industrial ecosystem due to the digital revolution is creating disruptive innovation and demands higher-level competitiveness through convergence with other industries such as manufacturing and logistics,” adding, “The future of distribution companies depends on how quickly they adapt to market trend changes and how well they apply and utilize innovative technologies.”