Online Malls to Beat Department Stores in Sales

Mouse-click checkouts are all the rage in South Korea, one of the most wired countries in the world.

In 2009, online shopping malls are likely to exceed local stores in sales, according to a recent report.

Internet shopping is expected to reach 21.2 trillion won ($16 billion) in goods this year, 1.1 trillion won more than those in department stores, the Nonghyup Economic Research Institute (NERI) said in a report on the prospects for the 2009 retail market.

The advantages of shopping online ― convenience and price competitiveness ― are poised to move ahead at full throttle amid the economic slowdown, it said.Online sales will maintain momentum with an annual growth of over 15 percent this year, as consumers opt for rational spending and try to avoid additional expenses to cope with the slump, NERI forecast.

Last year, Internet purchases grew 16.5 percent to 18.4 trillion won.Department stores are likely to post a lower sales growth of 1.5 percent this year, down 3.5 percentage points from last year, according to the report.

Growing sales in luxury goods were critical to last year's showing amid a worsening bipolarization of consumers, but even high-income households have been tightening their purse strings since the second half of 2008, casting a shadow over predictions, NERI said.

As costs rise for developing a new base of customers in the saturated market, department stores will make conservative management moves by focusing on retaining existing customers, it added. Large discount stores currently top in retail market sales here, but their growth will decline this year in the face of shrinking consumption and competition among leading brands, the report anticipated. Supermarkets and convenience stores are also expected to post an increase of 10.9 percent and 13.2 percent, respectively.The NERI report forecast the overall growth of retail markets will stand at a mediocre 2.1 percent this year, with sales amounting to 173.7 trillion won.

Online shopping malls have shown steady growth in recent years.

Their number reached around 4,500 in 2006, eight times more than in 1999, according to data from the National Statistical Office.

In last year's survey by the Korea Communications Commission, more than 60 percent of Internet users aged over 12 said they bought goods in online shopping malls over the last 12 months.