Invest Korea

The reason why the hoarding phenomenon, which was caused by the COVID-19 crisis in most countries, has not occurred in Korea is due to the soundness of its domestic supply chain. The domestic supply chain, from sourcing, manufacturing, distribution, to sales, was unshakable even in these times of crisis. Most daily necessities are produced in Korea. Numerous online and offline stores, the world's strongest delivery system, consumers who have experienced crises several times, and a sourcing network spread across the globe are defining characteristics of Korea’s supply chain.

As a result, a relatively stable level of retail sales was maintained in 2020 and drove production. The total retail sales index recorded 115.2 in February 2021, compared to 100 in 2015. The number is approaching the pre-COVID level of 116.2 from December 2019.

What is particularly noteworthy in the domestic non-face-to-face retail market is the completion of cold chain and prompt delivery services, which consequently increased trade in the food and beverage and food services.
Food service sales increased by 90.3% compared to the same month of the previous year, and food and beverage sales increased by more than 53%. Two items accounted for 27.8% of all total online shopping.
A wide variety of payment systems, various platforms in the food service market, sophisticated online promotions, the world's fastest internet and free services, and the world's highest penetration of mobile phones contributed to this achievement.

Korean retail companies have multiple retail channels and do business not only through TV home shopping, but also mobile, PC, department stores, large supermarkets, and convenience stores. These companies are making efforts to establish omni-channel business models, so it is difficult to find a company in Korea that is strong only in a specific type of business.

The distribution industry is rapidly undergoing digital transformation Large-scale retail companies in Korea are investing heavily in AI, big data, and smart warehouses, while building omni-channel business models. Nevertheless, few Korean companies can properly support them, especially in the fields of distribution and logistics. The Korean market can be seen as an undeveloped market with great growth potential for overseas companies that have accumulated extensive experience in supporting digital transformation.

Korean consumers are very open to new technologies and new sales methods. Korean consumers with a high level of education and strong curiosity adapt easily to the digital age, where the pace of innovation is very fast. The success of Coupang, which has become synonymous with mobile shopping, was possible because these Korean consumers became their customer base. New format channels, such as video commerce and the metaverse, are emerging one after another. These formats are already well known or significant investments are being made in the Korean market. The Korean market is the best test bed to gauge how widespread a new business model can be.