Cigarette prices buoy convenience store sales

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Cigarette prices buoy convenience store sales

Convenience stores sales have jumped for three consecutive months largely thanks to the hike in cigarette prices. But sales of cigarettes by volume have actually fallen as many people quit smoking after the increase.

According to a report by the Ministry of Trade, Industry and Energy on Wednesday, April sales at department stores barely grew compared to a year ago, rising 1.3 percent. Sales at convenience stores during the same period surged 28.3 percent.

At department stores, popular overseas brand sales grew 4.7 percent while food sales were up 3.7 percent. Sales of consumer goods increased 2.2 percent.

Convenience stores have been seeing exceptional growth. In February they saw a 10.2 percent year-on-year increase while in March that rate grew to 23.1 percent.

The biggest contributor to April’s increase was cigarette sales. Sales of non-food items, which includes cigarettes, surged nearly 54 percent year-on-year. The government raised cigarette prices from an average of 2,500 won ($2.26) a pack to 4,500 won, an 80 percent rise.

However, a study by Statistics Korea has shown that the number of smokers decreased in the first quarter. On average, 6.47 packs of cigarettes were consumed per month in a household of more than two occupants in the first quarter of 2014. That figure dropped to 3.97 packs a month for the first quarter of this year.

The statistics also showed that people with low incomes were spending less on cigarettes. In the first quarter, the average monthly spending on cigarettes by the bottom 20 percent tier declined 0.5 percent compared to a year ago to 15,063 won. On the contrary, spending by the top 20 percent increased 28.4 percent to 17,075 won year-on-year, largely due to the higher price per pack.

The ministry’s report also showed that major discount stores were struggling in April. Sales of consumer electronic goods dropped 5.7 percent year-on-year while sports-related goods were down 5 percent. However, overall sales at discount stores rose 2.8 percent largely thanks to discount promotions.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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