October 18, 2021 12:29
A majority of mom-and-pop stores have been driven to the brink of bankruptcy by the coronavirus pandemic, an alarming new survey suggests.
Pollster Embrain surveyed 800 mom-and-pop stores in Seoul, Gyeonggi Province, Busan, Daegu, Daejeon and Gwangju in late August and early September, and six out of 10 owners said they are not sure if they can stay open much longer if lockdown continue.
Fifty-eight percent of respondents face closure, but all said their financial difficulties will worsen if lockdown is tightened.
Over 60 percent of service businesses said they cannot last another three months, while 66 percent expect business conditions to worsen.
Although Korea is expected to start a phased return to normal early next month, many mom-and-pop stores are worried about rising inflation.
Although sales shrank markedly, many owners said they barely manage to stay open and pay rent and workers by taking out loans. Just over half said they will have to borrow more money to stay open.
One 59-year-old who has run a wholesale business in Seoul since 2000 said, “Even if I close down my store, I still have to repay my debts.” One in four said they had to lay off workers within the last three months because they could not pay them.
Another source of worry is inflation. Even if lockdown ends, store owners fear that customers will keep their wallets shut due to soaring consumer prices, and that would cut their tiny margins to nothing.
One 46-year-old who has run a restaurant in Gyeonggi Province for three years said, "Consumer prices keep rising, but I've been unable to hike the prices on my menu."
Owners also worry that the Bank of Korea will hike the key interest rate further to tame inflation, which would increase the interest burden on their debts. More than 50 percent have taken out loans to stay afloat, while 72 percent said their interest burden increased recently.
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