Since late October, South Korea has been under what South Koreans are calling a “collective gloom.” The nation has been entangled in a serious political scandal after South Korean president Park Geun-hye’s alleged corruption and abuses of power were revealed to a shocked, disbelieving public almost a month ago.
And this weekend, a new development took place: Park became the first South Korean president to be charged as a suspect for extortion while still in office.
Alongside Choi Soon-sil, her friend and now-fellow accomplice, Park is accused of coercing 77.4 billion won, or $65.5 million at current exchange rates, worth of funds from local conglomerates including Lotte Group and SK, and for helping allocate them into companies under Choi’s name.
Park has also been accused of giving Choi, a close confidante and daughter of Park’s late spiritual adviser Choi Tae-min, unwarranted power over government policy and decision-making.
“We named the president as a suspect because we believe she was an accomplice,” head prosecutor Lee Young-ryeol said at a press conference at the Seoul Central District Prosecutors’ Office on Nov. 20.
The nation has been in a state of tumult since the scandal began, with hundreds of thousands of people joining weekly protests in Seoul’s City Hall and Gwanghwamun districts. For the past four Saturdays, protesters have banded together to marching through the city to demand Park’s resignation.
The presidential crisis, compounded by the sluggish economy, as well as widening economic and social inequalities are making South Koreans feel especially disillusioned. But in spite of the disenchantment, they are still willing to shop.
“Most of my friends and I are indulging in ‘little luxuries’ like L’Occitane hand cream, Zara scarves and small jewelry items, said shopper Lee Ju-hyun. “We say we need to save up for a better future; for our pensions, for our houses…but after seeing how much Choi Soon-sil stole from the government [we don’t care anymore],” she said. “I think I’ll spend more now [instead of saving] because it will be impossible to buy a house anyway.”
The South Korean economy has been sluggish and will continue to be so until at least next year, but it has no correlation with the scandal, said Kang Sung-jin, an economist and professor at Korea University.
“[Socially, the political situation is affecting us seriously, but it’s not related to consumption. I have heard that the sales in alcohol at drinking establishments are higher than usual. This [as a general rule] means that the retail environment is not being affected seriously.”
In September, South Korea’s domestic consumption fell 4.5 percent, the biggest decrease in five years. The termination and recall of Samsung’s recent line of malfunctioning Galaxy Note 7 was named as one of the key reasons for the drop.
A representative with 101 Global, a showroom and local retailer said that the economy is still in recession. “Nowadays, retail sales at department stores have been seeing an overall decrease. This has been happening for the past three years,” he said.
Despite the lack of overall long-term growth, it appears that the fashion retail sector has experienced a slight boost in recent months thanks, in part, to smarter sales strategies.
From Sept. 29 to Oct. 31, South Korea held “Korea Festa,” a monthlong nationwide, government-supported shopping tourism festival. More than 300 retailers including Shinsegae Duty free, Lotte Department Stores, Galleria Duty Free and Olive Young participated in the special sale that saw discounts of up to 50 percent at certain shops.
The festival, re-branded from last year’s “Korea Black Friday” sale, also targeted incoming Chinese tourists visiting on Golden Week (Oct. 1-7), taking place during Chinese National Day.
According to the ministry of industry, South Korea’s major department stores (including Hyundai, Lotte and Shinsegae) experienced a combined 11.4 percent increase in sales year-on-year last month, up from the 4.1 percent year on year gain in September.
“In 2016, [apart from the presidential scandal,] we’ve had no major issues,” said Park Hee-jin, a retail analyst at Shinhan Investment Corp. “Last year, the MERS crisis had the worst impact on the economy in recent times. This is why in 2016, we’ve seen same store sales performances increase so much,” Park said.
Another faced contributing to the economy remaining stable, is the pragmatic way that South Koreans conduct their protests. During the week, life goes on as normal in central Seoul, while protests only take place on the weekends. Most have been fairly peaceful, with mindful participants keeping public spaces tidy and allowing local businesses to continue their operations.
Convenience stores and local restaurants located in the city center may in fact see a rise in sales, said Kim Tae-hyun, an analyst with LIG Investment and Securities, while adding that department stores are experiencing the opposite.
“On the weekend, department stores near areas where the antigovernment protests take place may see a decrease in sales because of the crowds of protesters,” he said. “But this will not have a significant effect on the overall future sales for department stores and fashion retail firms.”
Kim added that in the ensuing months, retailers will continue to use special sales as a strategy to boost their revenue. “The shopping festival in October saw sales increase mainly due to visiting Chinese tourists….[So] from now until February 2017, we can also expect retailers to launch more aggressive Christmas promotions and holiday sales to target shoppers.”
As of last week, many South Korean retailers launched early sales, in anticipation of Black Friday, the annual American post-Thanksgiving holiday sale.
All 33 branches of Lotte Department Store have been offering 30 to 50 percent discounts on imported brands. Shinsegae department store is holding up to 70 percent discounts on a range of hundreds of brands until Dec 4, while Hyundai is offering 10 to 50 percent discounts on select foreign fashion brands.