As the government begins paying "high oil price damage support funds" starting on the 27th, the retail industry is on high alert. The funds will be paid on a sliding scale of 100,000 to 600,000 won per person to the bottom 70% by income, and because usage is restricted, fortunes are bound to diverge by business type. The funds can be used at small business sites with annual sales of 3 billion won or less, such as traditional markets, neighborhood marts, convenience stores, and franchise outlets for fried chicken and bakeries. E-commerce and corporate supermarkets (SSM) and big-box retailers are excluded from eligible usage.
According to the retail industry, the four major convenience store chains—CU, GS25, 7-Eleven, and E-MART 24—are rolling out various marketing initiatives to capture the funds that start flowing that day. CU is running an integrated discount event on more than 50 everyday items, including ramen, instant rice, and tissues. Some items are individually discounted, and for certain items, shoppers get 10% off purchases over 10,000 won and 25% off purchases over 20,000 won. The discount period runs through the 31st of next month.
GS25 is also running discounts on high-frequency purchases such as instant rice and eggs. Through the 31st of next month, 17 private-label (PB) items under "Hyejaroun" and "Real Price" will be 25% off, and through the 15th of next month, a buy-one-get-one (1+1) promotion will run on popular items. 7-Eleven, under the theme of "high oil price livelihood stability," is offering 18 items including eggs, tofu, and bean sprouts, as well as meats such as jowl meat and samgyeopsal, at half price.
In the franchise sector, the funds cannot be used at company-owned stores and are valid only at franchisee outlets. Kyochon Chicken and Mom's Touch are informing customers via their apps and in-store notices that the funds can be used. Franchise coffee chain Ediya Inc. is also emphasizing via in-store stickers at franchisee locations that customers can use the funds. A franchise industry official said, "Company-owned stores are excluded, so there could be some consumer confusion, but we are supporting in various ways to capture spending with the funds at franchisees," adding, "As in the past, the first priority is to let people know it's possible."
Big-box retailers, SSMs, and e-commerce are taking a wait-and-see approach. Last year's livelihood recovery consumption coupons totaled about 12 trillion won, of which an estimated 7% went to convenience stores and the rest was spread across small businesses and traditional markets, but this year the total amounts to only 6 trillion won.
A retail industry official said, "Since the overall pie has shrunk, it may be hard to expect an overwhelming benefit for a specific business type," adding, "Last year, consumption coupons contributed to improved performance at convenience stores, but this year could be different." A big-box retail official said, "We or e-commerce could move to defend sales with in-house discount events." The retail industry believes that if retailers actively move to prevent consumer outflow, consumers could see a significant easing of price pressures.
The most dissatisfied are SSM store owners. Of the 1,457 domestic SSM stores under GS The Fresh, E-MART Everyday, Homeplus Express, and Lotte Super—the four major SSM chains—721, or half, are franchisees. In particular, at GS The Fresh, 471 out of 581 locations (81%) are franchisees. An SSM industry official said, "Franchises allow franchisees, so we can't understand why SSMs can't accept the funds even at franchisee stores."
Meanwhile, some in the retail industry say intensifying competition among formats could actually benefit consumers. Convenience stores are mounting aggressive marketing to capture the funds, while large retail channels are responding with price discounts, which could ease price pressures in the short term. A retail industry official said, "What matters more than the funds themselves is the shift in consumption flows," adding, "Usage restrictions will serve as a catalyst to strengthen consumption centered on nearby offline channels."