ⓒ YONHAP News

The nation’s biggest shopping event, Korea Sale FESTA, had a 10-day run from September 28 through October 7 this year. Modeled after Black Friday, the American sales event in late November, FESTA aims to be the country’s signature shopping festival. On today’s program, we’ll talk about the impact of this year’s Korea Sale FESTA with Professor Seo Yong-gu서용구 from the Department of Business & Economics at Sookmyung Women's University. First, let’s take a look back at the first two events from previous years.

The Korea Sale FESTA is the largest shopping festival in Korea, similar to the United States’ Black Friday and China’s Guanggun Jie. It’s a shopping and tourism festival promoted by the government with an aim to revitalize the domestic market. The event was initially titled “Korea Black Friday” when it was first launched in 2015, but it was renamed the following year, making this year’s event the 3^rd of its kind. In 2016, the festival ran for 33 days from September 29 to October 31. Records show that 210 retailers took part in the first Korea Sale FESTA that year, and sales increased by 12.5%. About 400 retailers participated in the 2017 event, but sales increased just 5%. 

The Korea Sale FESTA was implemented with a vision to revitalize the sluggish domestic market. The government designed the event with an aim to turn it into the country’s representative shopping and tourism festival through large-scale sales promotions. According to the Korea Institute for Industrial Economics and Trade, the first Korea Sale FESTA held in 2016 was able to boost private consumption expenditure by 0.27 percentage points and gross domestic product(GDP) by 0.13 percentage points. Last year, the event increased private consumption and GDP by 0.13 percentage points and 0.06 percentage points, respectively. Although it came short of expectations, the event did contribute to boosting consumption and reinvigorating the market. This year, the festival’s duration was shortened to increase sales concentration, and the number of participating retailers was expanded. 

The 2018 Korea Sale FESTA is the third iteration of the event. The duration was shortened to 10 days, but large manufacturers such as Samsung Electronics and LG Electronics took part to offer discounts ranging from 25 to 50%. At Hyundai Department Store, brands like Adidas and Nike offered discounts of up to 80%. Hyundai Motors took 7 to 20% off the prices of many of its autos. A large number of companies took part in this year’s event, including small-and medium-sized enterprises and vendors at traditional markets.

A total of 440 companies participated in this year’s Korea Sale FESTA. A number of large firms including Samsung Electronics and LG Electronics took part, while carmakers provided deals with discounts of up to 20%. Major department stores across the country also presented discount goods in efforts to draw in more customers. In addition to traditional market vendors, franchise companies also joined in. Twenty so-called “killer items” with phenomenally low prices designed to attract buyers to stores. As a result, sales made on the first and second days of this year’s event were shown to be 12% higher than the sales logged during the same period of last year’s festival. However, many say that the Korea Sale FESTA has yet to establish a firm foundation. When compared to China’s Guanggun Jie, which was launched in 2009, the disparity is staggering. 

China’s Guanggun Jie falls on November 11, which is also known as Singles’ Day. In 2009, Chinese shopping portal Alibaba promoted the day as a day of shopping, encouraging singles to celebrate their singlehood by making purchases. And even before the event reached its 10-year mark, an astonishing record was set in 2017. Some 400-million people shopped online during the one-day event on November 11, with the day’s sales reaching a whopping 28-trillion won, or 24.7 billion USD. That’s more than the combined sales made on Cyber Monday and Black Friday in the US. Alibaba’s excellent marketing strategies as well as the company’s growth and China’s market size have all contributed to the event’s rapid and massive growth. 

Sales reached 8-billion won on the first ever Guanggun Jie, which, like Korea Sale FESTA, is widely seen as a reimagined iteration of Black Friday. Last year, the figured had ballooned to 28-trillion won, up 40% from the previous year. In the U.S., online sales made on websites such as Amazon on last year’s Black Friday reached 15.8 trillion won, or 14-billion dollars. On the other hand, total sales made by some 100 distribution companies during the 2^nd Korea Sale FESTA last year during its September 28 through October 31 were just short of 11-trillion won, or 9.7 billion USD. What could be the reason behind the lackluster results of Korea Sale FESTA compared to similar events like Black Friday and Guanggun Jie?

Because the event is organized by the government, private firms tend to be passive about participation. Also, goods sold at large supermarkets, convenience stores and online in Korea are already offered at discounted prices. This means that only retailers such as those in department stores would be capable of offering discounts of over 50%. However, as the shops in Korean department stores are there on lease, they do not hold onto items in stock or are able to give away 50% of their profit. In addition, Korean department stores have their own sales events every season, four times a year. 

In short, one reason the Korea Sale FESTA held in October cannot find a strong footing is because there are no retail businesses in the country that can provide large-scale discounts. The lack of active participation by manufacturers is a second reason.  

Reasons behind the muted effects of the Korea Sale FESTA include the less than impressive rate of discounts and the small number of items offered, due to the country’s distribution structure that differs from those of other countries. The timing of the event was also noted to be problematic. While the major sales events held in other parts of the world are scheduled closer to year’s end, the Korea Sale FESTA is held between late September and early October. As the period is either too close to, or sometimes even overlapping with Chuseok, Korea’s largest holiday, Korean consumers may feel overly burdened by more shopping. But that is not to say that the Korea Sale FESTA is completely ineffective. Prof. Seo says some complementary measures must be made. 

Continuity is very important for a brand to establish a strong footing. That’s why the title has been fixed as Korea Sale FESTA. But the timing of the event still remains a problem. Because overseas shopping is possible now, many Koreans would rather wait for Black Friday or Guanggun Jie. So many people are questioning whether October is the right time for the shopping festival. Some people have suggested that January or February, around the time of Lunar New Years Day, would be better. With such opinions in mind, if the private sector were to take the helm, we may be able to expect the event to grow to be as recognizable as Black Friday in about 10 years, with Korean consumers going out of their way to wait for Korea Sale Festa.

Private sector leadership and continuity have been suggested as prerequisites for Korea Sale FESTA’s success. With this in mind, if the event is further shaped to better suit Korea’s market conditions and promote voluntary participation, in time Korea Sale FESTA may develop into a top shopping and tourism festival the nation can be proud of.