This is a recession in Korea. If you listen to the press, you think about bread lines. Retail down to 7.7% growth next year..................
ked.co.kr
(97/11/18) ÿ ÿ Retail Industry Will Face Lowest Growth Ever in 1998: Report
------------------------------------------------------------------------
[Retailing]---top
The retailing industry is forecast to face the lowest growth ever next
year as it will be hit by the prolonged economic downturn and
overheated competition among companies, according to a report by the
Retailing Institute of Distribution and Information (RIDI), which is
affiliated with Shinsegae Department Store.
The report on the 1998 retailing prospects said that the domestic
market will total 116 trillion won (approximately $110 billion) next
year, an increase of 7.7 percent from 1997. Discount stores and
non-store retailers such as door-to-door sales companies and
telemarketers will
enjoy high growth of more than 30 percent, while department stores
and supermarkets will sag with one-digit growths.
Shrunken consumer sentiments caused by the general economic slowdown
and overheated store-expansion race among companies, will result in
the lowest growth rate in the retail market. Accordingly, the
strengthening of competitive advantages and profitability will be the
most urgent tasks for retailers, the report said.
By sector, department stores will see a 4.5 percent rise next year.
The rate is a bit higher than a 3.9 percent growth estimated for this
year, but represents a sharp fall from a 21 percent expansion in 1995
and 16 percent growth in 1996, indicating that department stores
entered into a low-growth stage.
Turnovers of department stores will tally 14.1 trillion won or 12.1
percent of the overall market in 1998.
On the other hand, discount stores are consolidating their leading
position in the retailing market, increasingly posing threats to
department stores.
With the booming entrance into the discount store sector among
companies, 30-40 new stores will newly open across the nation to
expand the total number to 130 stores. Their proportion to the retail
industry will concurrently rise to 5.2 percent next year, from 1.8
percent in 1996 and 3.3 percent in 1997.
Backed by the high growth, large discount stores will become
strong enough to compete with department stores. Mixed blessings
are expected with the bright prospect, however; the stores in some
highly-competitive areas will face difficulties in expanding their
sales.
Supermarkets will be another gloomy sector as they lag behind
discount stores as a whole, while their traditionally strong
grocery division withers.
Among the non-store retailers, door-to-door merchants' businesses will
not do well, while telemarketers such as home shopping cable TV
channels and "direct-mail"-based marketers will enjoy more than a 30
percent growth, boosted by their time-efficiency and price advantages.
Growth of convenience stores will be accelerated by their active
regional expansions. Their activity is rapidly eating away the
conventional mom and pop stores' shares in the market and forcing them
to emulate some marketing strategies of convenience
and discount stores for survival.
Sales Prospects by Retail Sector
Growth (%):
1997: 6.1 30.0 30.0 100 5.2 3.9 8.3
1998: 5.4 30.0 30.0 67.0 5.2 4.5 7.7
Turnover (tril. won)
1997: 82.6 2.6 1.7 3.6 4.0 13.5 108
1998: 87.1 3.4 2.2 6.0 4.2 14.1 116.3
1. Others 2. Non-store 3. Convenience 4. Discount
(conventional retailers stores stores
markets, etc.)
5. Supermarkets 6. Dept. stores 6. Total
------------------------------------------------------------------------
Copyright (c) The Korea Economic Daily All rights reserved.
Contact webop@eco.ked.co.kr for more information |
