Consumption Coupons Boost Sales 5% Amid August Retail Drop
Overview of the Livelihood Recovery Consumption Coupons
The distribution of the Livelihood Recovery Consumption Coupons in July led to a notable increase in average sales over a six-week period. According to an analysis conducted by the Korea Development Institute (KDI), sales in eligible sectors rose by an average of 4.93% during this time, compared to the two weeks prior to the coupon distribution. This data was provided by the Ministry of Economy and Finance on the 1st.
New Sales Generated from Coupon Usage
A significant portion of the coupon usage contributed to new sales. The analysis estimated that approximately 2.1073 trillion Korean won in sales were generated as a result of the coupons. This figure represents 42.5% of the total coupon value, which was around 5 trillion Korean won. This means that a substantial part of the spending was directed towards new consumption rather than existing spending channels.
The government noted that this percentage is notably higher than the typical marginal propensity to consume, which is around 20%, or the effects observed during the COVID-19 pandemic with emergency disaster relief funds, which ranged between 26.2% and 36.1%.
Sector-Specific Impacts
Certain sectors experienced more pronounced effects from the coupon distribution. The clothing, accessories, beauty, and food service and beverage industries saw significant increases in sales. Additionally, improvements were noted in accommodation, travel, and cultural consumption starting from the third week of the coupon distribution.
Retail Sales Decline in August
Despite the initial positive impact, the analysis did not consider the effects of consumption coupons distributed through local gift certificates. A source from the Ministry of Economy and Finance explained that the short analysis period made it challenging to capture the \’multiplier effect\’—where increased consumption leads to business income and boosts domestic demand.
Some analyses suggest that while the distribution of consumption coupons can temporarily boost sales for small business owners, it may not be sufficient to fully revive sluggish domestic demand.
August Retail Sales Data
According to the \’August Industrial Activity Trends\’ released by the National Data Office, retail sales decreased by 2.4% in August compared to the previous month. This decline marks the largest drop since February of last year, when sales fell by 3.5%.
Retail sales had been declining at the beginning of the year but showed a 0.6% increase in June after stabilizing in May. In July, when the first round of coupon distribution began, consumption increased by 2.7%, leading to an expansion in the growth rate. However, retail sales turned negative in August when the coupons were fully distributed.
