Chaebols" Retail Network Under Attack

The Chaebols' exclusive retail network, which has long supported sales of their manufacturing industries in the retail market, is now undergoing change.
Retail stores in Korea that carry appliances, TVs, audio equipment, etc. operate under an exclusive agreement with a manufacturer and supply only those brand names to consumers. It was a comfortable and relatively profitable business arrangement in the past.
However since the International Monetary Fund(IMF) bailout started last November, these shops are suffering and many have been forced to close their doors due to a steep drop in sales. To make matters worse the arrival of discount stores, TV home shopping, and Internet shopping are further jeopardizing their customer base by drawing buyers with lower prices.
These challengers are invading the retail market armed with better selection and competetive prices while manufacturers are struggling to keep their outlet system, viable with better service.
LG Electronics had 1550 retail stores earlier this year, but saw that reduced to 1450 at present. Samsung Electronics lost 50 stores while Daewoo Electronics dropped 43 stores so far this year.
The fashion sector has felt a similar erosion of its outlet stores. Samsung's 'Esses' label is exclusively carried in their fashion stores. Last year they boasted 910 stores throughout Korea but now only 800 remain.
Miscellaneous goods and food sales are being changed to direct dealings with lower prices so distrubution and retail organizations are in trouble after 30% of their sales have been lost.
Experts predict that a new dealer system and more direct sales methods will soon be introduced in the Korean market as found in most developed countries' retail markets.
Moreover, the number of stores and their size will be minimized by downsizing in the near future.