South Korea’s retail sector, brought to a standstill by the Dec. 3 declaration of martial law, is showing tentative signs of recovery after the National Assembly’s Dec. 14 impeachment vote against President Yoon Suk-yeol. Retailers, eager to salvage the year-end shopping season, are reviving postponed promotions, but analysts caution that domestic consumption is unlikely to rebound quickly.
According to industry sources on Dec. 17, retailers have intensified efforts to attract holiday shoppers this December—a pivotal month for annual performance—following the National Assembly’s passage of an impeachment motion against President Yoon. Facing challenges such as weak consumer demand, high exchange rates, and unseasonal weather throughout the year, major retailers had planned to roll out holiday discounts and festive store decorations as early as November.
The Dec. 3 martial law declaration, however, derailed those plans. The exchange rate hit a two-year high, further dampening sectors such as travel and duty-free shopping.
Data from navigation app TMAP and Meritz Securities highlights the sharp downturn in department store visits. Traffic at major stores—Shinsegae, Lotte, and Hyundai—was already down 10% and 11% on the two Sundays preceding the martial law declaration, Nov. 24 and Dec. 1, respectively, compared to the same period last year. After martial law took effect, traffic growth collapsed further, plunging to -26% on Dec. 8 and -18% on Dec. 15. For retailers already grappling with declining customer numbers compared to 2023, the martial law declaration dealt another significant blow.
The current situation mirrors the 2016 political scandal that led to then-President Park Geun-hye’s impeachment. During the November-to-early-December sales period just before Park’s Dec. 9 impeachment vote, department stores posted negative growth for the first time in six years. Lotte Department Store’s sales dipped 0.7% year-on-year, while Hyundai Department Store saw a 1.2% decline.
“Sales in November were already sluggish due to the unseasonably warm weather, which dampened demand for winter clothing,” a department store official said. “The colder weather in December gave fashion sales a boost of 10% to 20%, and with the impeachment vote now behind us, we’re cautiously hopeful that consumer sentiment will pick up.”
A representative from a major supermarket chain pointed to ongoing consumer restraint. “Impulse purchases are critical for boosting sales, but right now, shoppers are sticking to essentials,” the official said. “Our priority is to stabilize sales and prevent further losses.
Experts believe it will take time for consumer confidence to rebound. During the 2016 impeachment proceedings, the Consumer Composite Sentiment Index (CCSI) fell sharply—dropping from 102.7 in October to 94.3 in December and sinking further to 93.3 by January 2017. Sentiment only began to recover after the Constitutional Court upheld Park’s removal in March 2017, when the index rose to 97.0 and climbed back above 100 in April.
The CCSI, which measures consumers’ economic outlook, signals pessimism when below 100.
In November, the index slipped by 1 point to 100.7 from the previous month. Analysts expect negative sentiment to persist through at least the first quarter of next year as impeachment proceedings unfold.
The retail sector’s outlook is particularly grim when compared to 2016. According to Statistics Korea, domestic retail market growth reached 4.8% that year. In contrast, growth this year is projected to remain in the low 1% range.
Under mounting pressure, major retailers like Lotte Shopping and Shinsegae Group are already taking drastic measures. Lotte Shopping, weighed down by losses at subsidiaries such as Lotte ON and Lotte Hotel Duty Free, has begun offering voluntary resignations. Shinsegae Group, meanwhile, has implemented layoffs across its affiliates, including Gmarket, SSG.com, and Shinsegae Duty Free (DF).
