Retail channelsSouth Korea provides one of the best internet access in the world and a very high internet penetration rate. That, together with the ongoing digitalization, leads to high online shopping usage among consumers. This advance of e-commerce in South Korea was only accelerated by the COVID-19 pandemic, and online shopping has become the leading retail channel, driven by the popularity of shopping via smartphones. To accommodate diverse consumer demands, online open market retailers, such as Coupang or Gmarket, utilize their marketplaces to offer a variety of products and thus are becoming key players in the industry.
What is important for retailers targeting South Koreans consumers is convenience, and if choosing to offer online orders, fast deliveries. Grocery retailers have used this strategy already, with overnight deliveries becoming standard practice for most retailers in order to remain competitive. As another solution to accommodate for convenience and allow for less interpersonal contact, crewless stores or hybrid system stores are on the rise.
Consumer behavior and COVID-19 impactThe purchasing power of South Koreans is steadily increasing with growing salaries, and with the restriction of working hours to 52 hours per week enforced since 2018 there is also more time to spend money than before. South Korean consumers are very tech-savvy and almost everyone owns a smartphone. They usually use these opportunities to research products and make informed consumer decisions.
Consumer spending dropped in 2020 due to financial worries because of COVID-19, closing businesses, and social distancing measures. However, it increased again in 2021 with the growth pushed by the strong online shopping segment as well as the increase in offline shopping which was bolstered by pent-up spending. Besides the usual well-selling consumer goods like foodstuff, fashion, and the large cosmetics sector, a new trend developed during the COVID-19 pandemic – investing in luxury items that would withstand any possible financial turbulences.