Ongoing health threats from fine dust have dashed hopes the recent holiday season would boost sales, according to industry sources in the distribution sector Sunday.
Consumption remained low even with the “golden holidays” last week, as individuals chose to cancel their outdoor plans amid text messages sent by health authorities and local governments warning of fine dust.
Visitors line up to take a look at the foggy skies of Seoul from the Lotte World Tower Seoul Sky, located in Songpa-gu on Saturday. (Yonhap)
While environmental authorities and the Organization for Economic Cooperation and Development predicted that the annual social cost rising from fine dust would be around 10 trillion won ($8.8 billion), the impact is likely to be even worse, as the problem is accompanied by weakening consumption sentiments.
A recent report also suggested that more frequent occurrences of fine dust may lead to consumers giving up on consumption rather than postponing it. According to researchers, an additional day of bad atmospheric condition leads to a 0.1 percent decrease in the sales at large retailers.
The reduction in the number of shoppers due to fine dust had already begun at offline stores starting last month, although crowds of people were seen flocking to indoor shopping centers and outlets as alternative to enjoying activities in open air.
Lotte Department Store’s monthly sales have dropped by 1.9 percent compared to last year. Hyundai Department Store has also seen a drop in their monthly sales in April, by 1.6 percent despite a spring sales event.
With the exception of home appliances on the rise due to the increasing demand for air purifiers, sectors that account for a large portion of sales, such as fashion, have been facing fierce falls.
Experts have likened the situation to May 2015, when the spread of Middle East respiratory syndrome discouraged consumption.
According to a report by the Bank of Korea, retail and service sectors faced huge drops in their sales, as consumers refrained from outdoor activities after the definitive diagnosis of MERS.
In the service sector, transportation, accommodation, food, art and leisure faced the largest decreases in sales, along with the fall in the number of tourists.
A similar pattern could be witnessed recently. A report by the OECD suggested that Korea would face the largest spike in mortality rate caused by air pollution in 2060. That was followed by a noticeable drop in the number of tourists visiting the country.
By Yim Ji-min (jiminy@heraldcorp.com)