When you walk down the streets of Myeongdong, Dongdaemun, Garosugil (Sina-dong), and even inside COEX mall, you will notice that more and more stores are shutting down. Offline stores have been under pressure due to online retailers even before COVID-19. Shopping habits in Korea are changing as more and more consumers in Korea opt for the convenience of shopping online via G-Market, Coupang, TMON, etc. When you add in social distancing regulations and a significant decrease in foot traffic you have a formula that will result in many small/medium independent stores going out of business in Korea. Foot traffic in busy areas in Korea like Hongdae, Gangnam, Apgujeong, Itaewon, etc. was the main factor for high commercial rental costs. Take foot traffic away and it just does not make sense to pay such a premium for what could ultimately make your store into just a large 3D billboard.
Offline Retailers in Korea Shutting Down
Many offline stores in Korea are shutting down for good. Even larger stores and brands have seen their revenue fall in the last year pushing most into financial crisis. As more and more consumers in Korea have stayed indoors, many were forced into using online shopping for most items. Many started to notice just how convenient online shopping has been. Some of the top eCommerce companies in Korea have seen their user numbers increase by 100 to sometimes 200%. Korean online fashion brands have reported an increase of over 100% in sales post-COVID. Global brands that have entered Korea such as ZARA and H&M have both reported a large jump in online sales from Korean consumers. These shopping habits in Korea are likely to accelerate even more in 2023 as more people continue to come online.
Shopping Habits in Korea Changing
Some might say it is too early to see the overall impact of COVID-19 on eCommerce. However, many experts in Korea feel these shopping habits will continue even as South Korea starts to live with COVID-19. This is because COVID-19 has already altered Korean consumers’ behavior. Korean consumers are very likely to continue to use products and online stores they found during COVID-19.
For example, Karrot Market, an online flea marketplace in Korea exploded in Korea during COVID. Likely, they would not have found the same level of success if there was no coronavirus pandemic. Users on Karrot give positive reviews of the service with many saying they will continue to use the service moving forward. This means that offline retailers and even malls in Korea could be another casualty of the coronavirus. HomePlus and Lotte Mall stores have already been shutting down starting from 2020 to now, 2023.
Investment Online
Offline retailers in Korea will have to invest in online presence and delivery services in order to survive. Fashion retailers in Korea are currently in the best position as consumers still need to try on clothes before they buy them. However, many fashion brands in Korea are having internal discussions on just how much physical presence they will need moving forward. While people like shopping in stores, many also like the convenience of shopping online. Therefore in order to attract new consumers, offline stores will need to offer a different retail experience. They will need to bridge the online and the physical store experience in this new landscape.
Retailers in Korea Need to think global
COVID-19 will not mean the end of physical stores in Korea. Actually going to a store and physically shopping is something that will be around for a long time. However, companies and brands in Korea will now need to focus on internet presence rather than foot traffic alone. In addition to creating an online presence, many retailers in Korea will have to try and acquire global customers. Many Korean companies in the past only focused on the Korean market. However, with the rise in online shopping in Korea, companies will be forced to look outside of Korea to find customers. This means many will need to invest in having a stronger global presence. This will require them to create content/advertisements in English and not just Korean. Creating such content will allow them to have a strong presence on Google, as well as Naver, moving forward.
