Chung siblings see reversal of business conditions amid virus outbreak

By Kim Jae-heun

Chung Yong-jin, vice chairman of Shinsegae Group

Chung Yong-jin and Chung Yoo-kyung are son and daughter of Shinsegae Group Chairwoman Lee Myung-hee.

The two are often compared on their business performance under the same group and what seems like a perfect win for the daughter is turning out differently with the worsening situation of the new coronavirus.

Up until the end of last year, it looked like the son was put on the defensive with declining performance of his offline retailer, E-Mart.

Even in the first month of this year, many forecasted a dark future for Yong-jin's business that recorded another operating loss of 10 billion won in the fourth quarter of 2019.

Chung Yoo-kyung, vice president of Shinsegae

The downtrend came as a result of the fast-growing e-commerce market led by Coupang and eBay Korea plus the government's stringent regulations on offline markets.

Conversely, Yoo-kyung was put in the spotlight for the highest turnover of her luxury fashion business. Her department store and duty free business takeovers hit a boom in sectors that cannot easily be replaced by online retailers.

People can shop for grocery and daily necessities online without much thought but it more common to purchase high price items upon inspecting their condition at offline stores.

In the fourth quarter of last year, Yoo-kyung's business saw operating profits of 194.5 billion won, up 45 percent, year-on-year.

Rumors said E-Mart employees' incentives dropped to one third of the amount that Shinsegae workers received last year contributing to a drop in morale.

However, the outbreak of the novel coronavirus has changed the story, especially in local retailing.

The market that was struck hardest by the outbreak is the duty free sector following the sharp decrease in numbers of Chinese tourists visiting here. Sales have plunged by 50 to 60 percent in February compared to that in 2019. Shinsegae's duty free business at Incheon International Airport, in particular, is in precarious condition as the rent fee there is much more expensive compared to stores in city locations.

Consumer confidence in department stores shrank drastically too. The sales at Shinsegae department stores have dropped by 15.8 percent from Feb. 1 to 25 compared to that of last year.

Department stores that were visited by infected customers and thus have had to close temporarily saw even greater losses. The country's highest profiting Shinsegae outlet in Gangnam also shut down their food court and the whole building, resulting in huge losses.

Unlike E-Mart that owns some 150 hypermarkets across the country, the number of Shinsegae department stores only reach one tenth of that. Thus, the financial damage caused by closing one department store is incomparable to closing one hypermarket.

An increase in the number of customers visiting E-Mart's offline stores to buy daily necessities that ran out online is also giving Yong-jin brief respite.

The lingering epidemic situation triggered domestic hoarding of instant food and water increasing sales at E-Mart by 5 percent in the last month compared to that in 2019.

In addition, E-Mart's online retailor SSG.com has witnessed skyrocketing sales by 71.2 percent from Feb. 19 to March 4.

An industry source said the son, Chung, has put up a good defense with his convenience store business in the first quarter of this year while his online retailor SSG.com showed rapid growth with many people moving to shop from their mobile devices.