Namdaemun struggles to catch up with a contactless world

Industry

Published: 08 Feb. 2021, 19:48

Namdaemun struggles to catch up with a contactless world

Hanbok, or Korean traditional clothing, for children hangs at a store in Namdaemun Market in central Seoul, on Sunday, less than a week before the Lunar New Year holidays. In contrast to previous years, many businesses took a major hit from the coronavirus pandemic, recording record-low sales. [YONHAP]

Ahead of the Lunar New Year, Namdaemun Market, a traditional market in Jung District, central Seoul, looked starkly different to previous years. Although not empty, the market lacks the hordes of tourists and overseas merchants that used to descend on Namdaemun en masse.

The 66,000-square-meter (16.3 acres) traditional market, a well-known tourist attraction before the coronavirus pandemic, is mainly frequented by local customers these days, many of them the elderly. The coronavirus pandemic has taken away the bustling energy of customers and merchants haggling everywhere, except for the occasional cry from store owners desperately trying to pull in customers.

Where lines of vendors once stood, selling knick-knacks and street food, ranging from tteokbokki (spicy rice cakes) and hotteok (honey and nut-filled pancakes) to socks and knock-off Supreme sweatshirts, are now lifeless vehicles covered in sheets.

Shin Min-joo, the 30-year-old owner of children's clothing store Aibang in the well-known shopping mall Samick Fashion Town, said at the end of January that she had barely sold anything, even with the holidays around the corner.

“Usually, there are so many grandparents who would come to our store to buy dresses for their grandchildren ahead of the Lunar New Year,” Shin said. “There is also no demand for our wholesale business from our regular clients from China, Russia, Taiwan and Hong Kong.”

Sellers of items for jesa, or ancestral rites, have been heavily impacted by the drastic drop in sales for the holiday. An owner of a commemorative dishware shop said the entire floor has been silent, adding that he is bitter about the president’s policies that are so out of touch with reality.

Merchants that own stores out on the streets are opening as usual, but they have to wait a lot longer for anybody to show up and buy anything.

“With the coronavirus pandemic, sales right now are almost one-tenth what they used to be,” said Kim Sung-ju, the owner of a jewelry business in the market.

Kim said sales had already been declining annually leading up to the coronavirus pandemic, due to intensified competition among the ever-growing number of small-store owners. Now, however, he only wishes that he could at least get back to the level business was at before the pandemic hit.

Social distancing levels strictly determine business performance, Kim said. Customers need to be out and about for the market to thrive — but with the current restrictions in place, most of the business owners, including Kim, have little hope of business picking up.

An alley in Namdaemun Market on Sunday. Namdaemun Market has suffered bigger losses than other traditional markets because it heavily depended on tourists. [YONHAP]

When asked about the possibility of taking their business online through platforms run by KakaoTalk or Naver, merchants are hesitant because the barriers to entry are becoming lower, intensifying competition. Not only is the digital space difficult to navigate for many store owners who are older, but the fees are also burdensome.

Han Hee-su, 61, the owner of Halmoni Gimbap, said starting delivery services on online apps is not an easy decision to make. Many of the merchants in the Namdaemun Market are similar to Han in age, and she said they are unfamiliar with digital platforms.

“I was going to try to register my business on the delivery apps,” Han said. “But I saw that I had to pay 88,000 won [$78.53] as a monthly fee, and there are restrictions on delivery destinations.”

“When we enter online platforms, we have to increase the price by 2,000 won or so,” Kim said. “Although sales may go up, I also need to pay a lot of fees on the back end, so wouldn’t it be better to not go online at all?”

A spokesperson for the market stated that the overall sales of Namdaemun have fallen by between 30 and 50 percent since the coronavirus pandemic started. As of January 2021, around 750 stores have closed.

As consumers increasingly opt to shop online for food in preparation for Lunar New Year, sales of related products on e-commerce sites have been surging compared to previous holidays.

SSG.com’s sales of readymade traditional Korean dishes increased 70 percent on year. Korean-style meatballs and tteokgalbi, or Korean short rib patties, sold 355 percent more. Sales of modum jeon, or assorted Korean pancakes, rose 120 percent. Readymade japchae (stir-fried noodles) with beef and mushroom and jeon with seafood and chives each sold 160 percent more.

Since the government limited gatherings to a maximum of four people, people have also been buying less food for Lunar New Year celebrations. For the past two weeks, sales of 150 grams of beef soup sold five times more than the 300-gram version. Sales of onions in one-kilogram (2.2 pounds) bundles sold more than three times than 2.5-kilogram bundles.

On e-commerce website Market Kurly, complete sets of food for jesa have been popular. A set worth 100,000 won consisting of japchae, galbi-jjim, or braised short beef ribs, and modum jeon sold 56 percent more from Feb. 1 to 4 compared to the days before the Chuseok holiday.

Among the consumers that ordered their food online, 52 percent set delivery dates to Feb. 11, the day before the Lunar New Year, and 48 percent set it to the morning of Feb. 12, which is the day of the New Year.

The Banchan, which is an online food mall operated by Dongwon, sold 20 percent more sets of premium jesa foods worth 250,000 won. An assortment of jesa dishes and fruit is delivered before Lunar New Year.
According to the Korea Agro-Fisheries & Food Trade, a state-run corporation, the cost of preparing jesa dishes rose 15.8 percent for purchases at traditional markets and 17.4 percent on year for major distributors due to the rise in prices of eggs, fruits and vegetables.

"The coronavirus pandemic has dealt a major blow to Namdaemun Market, since businesses have been slow to adopt the contactless business model," said Lee Deok-hyeon, the planning and marketing manager at Namdaemun Market. "The market is in the process of establishing online channels to support merchants with their businesses on platforms like Naver Smart Store."

Namdaemun Market's short-term and long-term goals, which will be partially sponsored by the government, focus on transforming the market into a commercial space suited for the contactless era during and after the pandemic, Lee said.

BY LEE JEE-YOUNG, BAEK MIN-JEONG AND LEE BYUNG-JUN [lee.jeeyoung1@joongang.co.kr]