[Photo by Lee Seung-hwan]
South Korean retailers could face their worst-to-date year in 2020 due to the sudden outbreak of a new deadly disease from China as they could lose over 10 trillion won ($8 billion) from their primary cash cow duty-free business in addition to losing more customers to online business amid epidemic scare.
Duty-free shops saw their sales more than halved in recent weeks since the number of people infected by the new coronavirus first reported in Wuhan, China late last year and its fatalities rapidly increased in the middle of last month. The Korean retailers estimate their total losses for this year could exceed 10 trillion won if the current condition continues until the end of the year. On a daily basis, the loss would be 30 billion won.
Weekend sales at Shinsegae Duty Free, one of the country’s top retailers, plunged 54 percent on Feb. 8-9 against the comparable period a year earlier, according to the company on Monday.
Typically, sales at Korean travel retail shops during that particular weekend following the end of the Lunar New Year holiday fall 30 percent compared to regular weekends with big-spending Chinese visitors returning home, informed a Shinsegae Duty Free official. The travel retailer earned 4.2 trillion won in sales last year.
Lotte Duty Free, the country’s largest travel retailer that registered 9.4 trillion won in sales last year, also saw its sales sink 40 percent over the same period. Its main branch in Myeongdong, a shopping hotspot in central Seoul, and its department store unit were closed from last Friday afternoon until Sunday after the country’s 23rd novel coronavirus patient was confirmed to have visited shops there.
The duty-free store reopened after sanitization and disinfection work on the premise. But the two-and-a-half-day closure is estimated to have caused the travel retailer a loss of nearly 50 billion won, based on average daily sales figures from last year.
[Photo by Kim Ho-young]
Shilla Duty Free did not disclose the exact financial damage but said visitors at its shops fell by about the same percentage as others. The company closed two branches – Seoul and Jeju from Feb. 2 to 6, also due to a visit by a coronavirus patient. Daily sales at Seoul and Jeju outlets reportedly average up to 10 billion won and 5 billion won, respectively. The company as a whole recorded 7.8 trillion won in sales last year.
Local department stores are also suffering from the coronavirus outbreak that has kept many Koreans at home.
Lotte Department Store said its sales fell 14.1 percent on Jan. 27-Feb 9 against the comparable after-Lunar New Year holiday period of last year. Shinsegae Department Store’s sales declined 12.4 percent over the same period. Hyundai Department Store also said its sales sank by double-digit.
By Kim Gi-jung and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]