Department Store Tenants Pay 21.3% Commission... Large Mart 18.7%

It was found that companies operating in department stores and large supermarkets pay an average commission fee of around 20%.

The Korea Federation of SMEs announced the results of the "Department Store and Large Supermarket Distribution Transaction Survey" conducted on 900 companies operating in offline distribution giants such as department stores and large supermarkets on the 16th. This survey was conducted to identify the cost burdens and difficulties experienced by companies operating in department stores and large supermarkets during transactions in 2022.

The sales commission rates borne by tenant companies in special purchase and lease transactions were on average 21.3% for department stores and 18.7% for large supermarkets. Special purchase is a contract with a condition that allows large-scale distributors to return unsold products among the goods they purchased. They purchase goods on credit from suppliers and pay the suppliers the sales proceeds after deducting a certain rate or amount of sales revenue. Lease refers to a method where large-scale distributors collect rent linked to product sales from tenant companies that lease stores. In direct purchase transactions, the margin rate of large-scale distributors was on average 23.9% for department stores and 18% for large supermarkets. Direct purchase is a method where large-scale distributors bear the sales responsibility for unsold products among the goods they purchased and buy products from suppliers.

The perceived appropriateness of cost burdens by companies operating in department stores and large supermarkets was above average. The current perception score of cost burden appropriateness (out of 100 points) was 56.4 points for department stores and 50.1 points for large supermarkets. In both sectors, the proportion of companies responding that the cost burden was appropriate was higher than those responding that it was burdensome.

The proportion of companies that experienced unfair or unjust practices during the process was low for both department stores (1.2%) and large supermarkets (2.3%), but in both sectors, there were many opinions hoping for improvements in working conditions such as expanding employee convenience facilities like break rooms.

Son Seong-won, Head of the Small Business Policy Office at the Korea Federation of SMEs, stated, “Although the cost burden on companies operating in department stores and large supermarkets has somewhat eased compared to the past due to competition with online distribution and efforts for coexistence, the demand for improved working conditions for tenant company employees was found to be high. We plan to continuously monitor the improvement of cost burdens through regular surveys in the future and to identify various difficulties including additional costs beyond commissions.”