"Sales increased by 30%" vs "Only a temporary effect"... The one-month report card of consumption coupons

[Financial News] On the 20th, Kwon Sun-il (alias, 55), a food ingredient vendor at Gyeongdong Market in Jegi-dong, Dongdaemun-gu, Seoul, was busy welcoming customers. He said, "The number of people coming to buy side dishes in the evening has increased significantly," and "Even during the day, many elderly people take a lot of things like vegetables and tofu. However, everyone jokingly says they have to save money."
The 'Livelihood Recovery Consumption Coupons' distribution, which started on July 21, has reached its one-month mark. The government provided the first consumption coupons of 150,000 won to the general public, 300,000 won to the lower-income class, and 400,000 won to basic livelihood recipients. The usage was limited to stores with annual sales of 3 billion won or less. 


According to the Ministry of the Interior and Safety, as of the 13th, the consumption coupon distribution rate exceeded 97%. A total of 48.93 million people received approximately 8.8619 trillion won. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol mentioned, "Retail sales have turned to an increase for the first time in four months, and consumer sentiment has reached its highest level in 4 years and 1 month." In fact, the consumer sentiment index in July was 110.8, exceeding the long-term average.
The response from small business owners is also positive. According to the 'Livelihood Recovery Consumption Coupons Effectiveness Survey' conducted by the Korea Federation of Micro Enterprise from the 5th for three days targeting 2,035 small business owners in neighborhood shopping districts and traditional markets, more than half (55.8%) of the businesses saw an increase in sales after using the consumption coupons, and more than half of them recorded an increase rate of 10-30%. The visitor increase rate was also 51.8%. 75.5% of respondents evaluated it as effective in encouraging the use of traditional markets and neighborhood shopping districts.
Park Young-sook (alias, 64), who runs a restaurant in Okryeon Market, Yeonsu-gu, Incheon, said, "Although the number of customers hasn't exploded noticeably, it's still a bit more relaxed than earlier this year."
Of course, there are also opposing views. Heo Seol-hyeon (alias, 38), who runs a hair salon in Seongdong-gu, Seoul, said, "It's often the case that regular customers just changed their payment method rather than new customers coming in," and "There was a temporary effect for a month, but it seems the trend will decline in the future."
In a nationwide survey by PMI (1,000 adult men and women nationwide), 53.9% of the people responded that "the consumption coupon policy should continue in the future." On the other hand, 21.1% said "no," and 25% said "don't know." 
Professor Lee Jeong-hee of the Department of Economics at Chung-Ang University said, "Consumption coupons play a role in boosting sales in the short term and revitalizing neighborhood shopping districts like regular discount events at department stores or large marts," adding, "It's difficult to expect a significant long-term effect, but it served as a 'primer' to ease the stagnant livelihood economy." He continued, "However, in the long term, it is necessary to prepare consumption promotion measures in conjunction with sustainable institutional devices."
Meanwhile, the Ministry of the Interior and Safety announced the second consumption coupon distribution from September 22 to October 31. It is expected that 100,000 won will be given to 90% of the population, excluding the top 10% income earners.


jimnn@fnnews.com Shin Ji-min reporter