South Korea to expect modest near-term retail sales figures | Retail Asia
, Korea

South Korea to expect modest near-term retail sales figures

The country is seeing its worst outbreak, leading to tighter restrictions on stores.

Despite improving figures this year, South Korea’s retail sales is expected to continue to be constrained in the near term as inbound tourism in the country remains frozen, according to a report from Fitch Solutions.

Retail sales in South Korea posted a 10.9% YoY rise in March, the highest since January 2011, following a 8.3% YoY growth in February. This data in part reflects a low base of comparison from early last year amidst the outbreak.

Further, consumer confidence In Korea has been on an upward trend over 2020-2021, after the index hit a record low of 73.3 in April 2020. Most recent data show confidence levels reaching 102.2 in April 2021, but this is still lower than pre-pandemic levels.

As of 17 May, the country remains on the downward end of its third wave. However, in terms of daily cases, this wave has been the country's worst yet, recording a seven-day average of 1,380 COVID-19 cases at its peak, Fitch said.

This led to authorities expanding social distancing restrictions across South Korea. The country is currently on Level 2, the third-highest tier, of the government's COVID-19 response plan. 

Many public establishments, including department stores, private schools, in-person dining, and entertainment facilities, must close by 9PM. Restaurants and cafes must stop indoor dining at that time, though takeaway service can continue.

Unemployment is estimated to remain slightly elevated over Q1 2021 but is still expected to show continued improvement, reducing pressure on spending over the remainder of 2021, as economic growth supports job creation and disposable incomes.

Real household spending in South Korea is projected to begin its recovery over 2021, growing by a projected 2.5% YoY, after an estimated contraction of 3.9% in 2020, as the economic impact of the pandemic has created a low base for consumer spending to grow from.

South Korean households have been supported by the government, partially shielding them from the worst of the economic impact. This support included wage subsides and cash payments to households suffering from falling income due to Covid-19.

“The recovery in retail sales will rely on the ability of the government to vaccinate enough of the population, to allow for the gradual easing of restriction,” Fitch said. South Korea began vaccinations in February and, as of 17 May, has administered 9.1 doses per 100 people.

“This is higher than regional peer Japan with 4.8 doses per 100 people. However, we note that this is still a slow rate and could mean that if there is an uptick in Covid-19 cases in the country, it would not be enough to starve off any further restrictions,” the report added.

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Get Retail Asia in your inbox
It will launch data centres in the Philippines and Indonesia.
Manila, Central Luzon and Bicol have been the key target regions for new pharmacies.
It is looking to penetrate residential areas in Tier 1 cities.
It is looking to open four locations in the city by end-2022.
It is expected to be completed by 2024.
Lecoo aims to launch 600 stores in the coming year.
For instance, Tous Les Jours is selling two to three times more than competitors.
The country’s live commerce market has been growing at a rapid pace.
It plans to expand to 400 from 138 stores in the market in the long term.
Real household spending is not expected to hit pre-pandemic levels by 2021.
This will mark the largest M&A deal in the country in H2 2021.
It will have 38 retail leases expiring by March 2022.
It has also expanded its one-hour shopping service to lower-tier cities.
It is testing its delivery service in selected locations in Tokyo.