Decline in Sales for‍ Small and Medium-Sized Businesses in Large Supermarkets

A recent survey by the Korea Federation of ‍SMEs has revealed that 4 out of 10 small and medium-sized ⁣businesses operating in​ large supermarkets have experienced a‌ decline in sales.

The survey, which targeted 900 SMEs operating ⁢in department stores and ⁣large marts, found that ⁤40% of⁤ respondents ⁤reported a decrease in sales⁤ through large marts​ in 2023 compared to⁤ the previous year. This is nearly four times ⁢the number of respondents⁣ who reported ⁢an increase in⁢ sales.

The average sales decline was 16.4%, with ‌36.3% of respondents reporting‍ a decline of more than 20%. The main reason cited for ⁣the decline in sales was ⁢the growth of ​the online distribution⁤ market, with 80.6% of respondents stating that this had ‍a‌ significant impact on ​their sales.

In terms of measures⁤ to address the decline in sales, ‍67.4% of respondents cited expanding online transactions,⁣ while 25.6% ⁢reported having no special measures in place or planned.

The survey also found that ‍the sales commission rate borne by⁤ SMEs operating in department ⁢stores and large marts was high, with an average rate of 22.4% for ​department stores and 18.6%‍ for large marts. The highest commission rate was ⁣32.0% ⁣for department stores and 30.0% for​ large marts.

The margin rate of large distributors in direct purchase transactions was also found to ⁤be high, with an average ⁢rate of 22.9%⁤ for department stores and 20.4% for large marts.

Regarding the level of transaction cost burden, 67.8% of‌ respondents reported no change compared to the ⁤previous year, while 27.8% reported an​ increase ‍in the level of burden.

The survey also found⁢ that the percentage of stores that experienced unfair trade ​practices and unfair practices ‍during the transaction process ‍was low, but respondents requested improvements such as minimizing event costs⁣ and reducing commissions.

Cho Moon-gap, head of the economic policy division of the Korea ‌Federation of SMEs, emphasized ​the need for policy interest ⁣and support to activate ⁤offline distribution and create win-win synergy ⁣between large offline distribution‌ companies and SMEs.

Key Findings:

• 40% of SMEs operating in large ⁢marts reported a decline​ in sales in 2023.
• The average sales decline was 16.4%.
• 80.6% of respondents cited the growth of the ‌online distribution market as⁣ the⁤ main reason ​for ⁢the​ decline​ in sales.
• 67.4% ​of respondents reported expanding online transactions as a measure to address the decline in sales.
• The sales commission rate borne ​by SMEs operating in department stores and large marts was high, ​with an average⁢ rate of 22.4% for department stores ⁤and 18.6% for large marts.

Recommendations:

• Large offline‌ distribution ‍companies should consider strategies⁣ to ⁤strengthen their competitiveness and create win-win synergy with SMEs.
• Policymakers should provide interest and support to activate offline distribution and promote fair trade‍ practices.
• SMEs⁤ should consider expanding‌ online transactions ⁣and diversifying their sales channels to mitigate the‍ impact of the decline in‌ sales.