Compared with the COVID-19 period? Sales were actually better then.
On the 31st at the Sungnyemun Imports Arcade in Jung District, Seoul. A person surnamed Kim (60), who runs a whisky shop, said, "There are really no customers," adding as much. The place is also called a "whisky mecca" for its cheap prices and wide selection, but there were more merchants than customers. More than 10 stores had closed and sat vacant.
Other whisky shops were in the same situation. From 11 a.m. to 6 p.m. the previous day, there were only five visitors. More of them asked only about prices without buying alcohol.
A shop owner, a person surnamed Park (72), lamented that it has become hard to sell even five bottles of whisky priced in the 100,000-won range in a day recently. Park said, "Unsold liquor is piling up," and added, "Prices are rising because of the exchange rate, but I can't raise retail prices for fear customers will stop coming altogether."
As the won has surged against the U.S. dollar (won-dollar exchange rate), merchants at the Sungnyemun Imports Arcade are growing more anxious. Because most of what they sell is foreign-made or uses raw materials brought in from overseas, a higher exchange rate directly translates into an expense burden.
Whisky shop merchants at the Sungnyemun Imports Arcade cited the economic downturn and the spread of a no-drinking culture among people in their 20s and 30s as reasons customer numbers have fallen.
To make matters worse, the exchange rate has jumped. In the Seoul foreign exchange market, the won-dollar rate broke through the 1,530-won level intraday. It is a record high in 17 years since the global financial crisis.
The won-dollar exchange rate has risen more than 6% just this year. That means they have to bring in whisky at higher prices. But to stay price-competitive, they are not reflecting that in retail prices. At the Sungnyemun Imports Arcade, a 1-liter (L) bottle of bourbon whisky was being sold in the 40,000-won range, about 5,000 won cheaper than the going market price.
The problem is that customers expect even cheaper prices. A person surnamed Jeon (31) said, "I came because I heard whisky was extremely cheap, but the difference from the market price isn't even 10,000 won, so I don't find it appealing."
Merchants who import raw materials to make products to sell were even more despondent. A person surnamed Oh (42), who runs an accessory-making business near the Sungnyemun Imports Arcade, explained that the company conducts transactions with raw material suppliers in dollars, making it unavoidably sensitive to the exchange rate.
Oh said the business had been operating on a baseline of 1,450 won to the dollar, but after the Middle East crisis pushed it into the 1,500-won range, they were forced to a point where there is nothing left even after selling. Oh said, "Material costs have steadily risen, but the delivery price has been frozen for years," adding, "If (the won-dollar rate) rises to 1,590 won, I will likely have to seriously consider quitting."
A shop selling hats and scarves also imports fabric from factories in China and Vietnam. Payments are made in dollars. The owner, who had been twirling scarves to catch customers' eyes, let out a sigh. The owner said, "We sell two scarves for 5,000 won, but with the exchange rate jumping, there's really nothing left even if we sell."
Shops that transact in Japanese yen also said conditions are unfavorable. A person surnamed Park (36), who sells Japanese products at the Sungnyemun Imports Arcade, said, "Compared with the dollar, the yen has risen less, but higher oil prices have increased shipping costs, so it's just as hard."
The recent surge in the exchange rate is largely attributed to the dollar's strengthening as preference for safe-haven assets has grown with the war between the United States and Israel and Iran. High oil prices and net selling by foreign investors in the stock market are also fanning the exchange rate's rise. That means the difficulties for merchants at the Sungnyemun Imports Arcade are likely to continue until the Middle East situation calms.
A merchant met at the Sungnyemun Imports Arcade said, "I'm wondering if I should just open one of those tourist-oriented pharmacies that are popular with visitors these days."