November 20, 2015 13:48
The landscape of Korea's retail industry has shifted over the last few years due to the growing number of singles, online purchases and frugal purchasing patterns.
Traditional retail giants like department and superstores have seen revenues drop, while convenience stores and online shopping malls are booming.
Shinhan Card analyzed spending patterns by 700,000 heavy spenders who account for 10 percent of total credit card users in 2010 and in March to May of this year.
It found that the proportion of credit-card spending at department stores, supermarkets and TV home shopping channels fell from 46.1 percent to 31.1 percent over the last five years, while that of convenience stores and online shopping malls rose from 30.1 percent to 43.5 percent.
◆ Single Men
Convenience stores stood out among 14 retail sectors considered in the survey. Based on credit card spending, convenience stores' share of the retail industry rose from 1.6 percent in 2010 to 5.7 percent this year, a 3.5-fold increase.
In contrast, department stores' share dropped by 25.7 percent, and superstores' 34.2 percent. The share of TV home shopping channels plunged 37 percent.
One 36-year-old single office worker frequently shops for groceries at the local convenience store. He buys mainly milk and drinks and ready-to-eat meals for two to three at a time, with an eye on special offers. "Products are more expensive in convenience stores, but I don't really buy much," he said.
He rarely buys fresh produce since he does not cook at home. Only once every two to three months does he go to the supermarket. When it comes to clothes be buys online.
Single men in their 30s are mostly responsible for boosting convenience store sales. One out of every three customers or 32.5 percent are men between the ages of 28 and 37. But a growing number of men in their 40s are also switching to convenience stores.
The consumption patterns of singles here are similar to those in Japan, which saw a rise in one-person households and an aging society 10 to 20 years earlier than Korea.
◆ Online Shopping Malls
Online shopping malls have also gained a solid share of the domestic retail market, accounting for 37.8 percent of credit card spending, which is higher than the market shares of supermarkets (18.6 percent) and superstores (18.4 percent) combined.
In terms of per-capita monthly credit card spending, Koreans spent W365,000 at online shopping malls, compared to W159,000 at superstores and W122,000 at department stores (US$1=W1,164).
Mobile shopping accounted for 48.5 percent of online shopping mall revenues.
◆ Prudent Spending
As unemployment remains high among young people, consumers in their 20s are keeping their wallets shut. Credit card spending in March to May by men in their 20s rose only W50,000 compared to five years ago, and credit card spending by women in the age group only W90,000.
In contrast, credit card spending among consumers in their 30s to 60s rose by around W100,000 to W220,000.
Kim Dae-jong at Sejong University said, "Women in their 20s usually spend money on cosmetics, clothes and accessories but are cutting down on unnecessary purchases due to the tough job market. But as more and more people put off marriage until later in life, spending by working women in their 30s has increased."
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