An inconvenient truth
The author is an editorial writer of the JoongAng Ilbo.
Small business owners are in agony. An economic slump and the minimum wage increase coincided with an extremely hot summer. Customers are no longer visiting stores. As complaints from the small business owners — mostly self-employed — could affect its approval ratings, the government is frantically trying to help. It is considering rent control and ways to force credit card companies to reduce card commissions. President Moon Jae-in even appointed a secretary for the self-employed at the Blue House. Is this the right direction?
Recently, I met a friend from New York. When I asked how things were going there, I got an unexpected answer. “Stores in Manhattan are closing down one after another,” he said.
Stores in New York City going out of business? Isn’t the United States enjoying an unprecedented economic boom? With 4 percent economic growth and near full employment, American stores should be thriving.
But his take was completely different from my expectations. As stores go out of business, there are many empty retail spaces all over Manhattan, where it used to be impossible to get prime locations. In fact, last year, more than 9,000 stores shut down, 4.5 times more than some 2,000 a year ago.
It turns out that a new phenomenon called “retail apocalypse” is spreading across the U.S. There are various causes, including the decline of the middle class and a saturation of retail stores. But the biggest factor is online shopping, most notably Amazon. From electronics to clothing to groceries, everything can be ordered online. Brick-and-mortar shops are struggling.
This retail apocalypse is not limited to the United States. Stores in Europe, especially the internet-savvy United Kingdom, are struggling and closing.
At this juncture, retailers are transforming. From places that sell products, they turn into places where customers can try things on. They can see products in person — and then order them online.
In Korea, many seem to think that the crisis of the self-employed results from the economic slump, wages, high rents and credit card commissions. The government policies are in response to these factors. But if the sluggish business is due to online shopping, the countermeasures should be different. Small businesses will not revive even with rent control and reduced credit card commissions.
For its small business booster measures, the government announced a plan to find and nurture stores that will last more than 100 years. It would be nice if stores can be in business for 100 years, but I am afraid money may be wasted, and stores will go out of business. It would be better to encourage stores to shut down with no consequences to reduce competition in the saturated small business market. Of course, hardly anyone would give up a proper job to open a small business. It means that small business serves as a social security net. So the issue should be handled carefully to protect the socially weak.
Nevertheless, it is the government’s duty to understand changes in the world and inform the public, even if it is an inconvenient truth. The government should admit that the age of brick-and-mortar stores is ending, so those who want to sell clothing should go online.
When text messages were introduced in 1997, many people dismissed them and kept making phone calls. But in 10 years, things have changed, and everyone is texting. Phone calls come as a surprise these days. Life is change. It’s futile to deny that and stick to old ways.
JoongAng Ilbo, Aug. 9, Page 30