[비즈한국] As main news programs have been topping TV viewership ratings following the December 3rd emergency martial law crisis, anxiety within the home shopping industry is mounting. Having anticipated a year-end boost, the home shopping sector is on edge, fearing that prolonged political instability could have a negative impact on sales.
'Plunging Sales Due to Martial Law Crisis' Raises Concerns for Q4 Performance
Expectations are growing that the home shopping industry will face a colder winter than ever before. This is because reports are surfacing that consumer sentiment has shriveled due to the economic downturn, and with political uncertainty added to the mix, year-end sales are a cause for concern.
Since the declaration of emergency martial law on the 3rd, the home shopping industry has taken a hit to its revenue. One industry official sighed, saying, "Immediately after the emergency martial law crisis, broadcast sales dropped to one-fifth of their levels. Products that normally achieved over 100% of their sales targets fell to the 10% range following the martial law incident." Another industry source reported, "Viewership has dropped due to the martial law crisis. While I cannot disclose exact figures, most of the industry is likely in a similar situation."
Industry insiders analyzed that because the primary viewership for home shopping consists of middle-aged and elderly people in their 50s and 60s, the impact is greater than in other retail sectors. Those in the middle-aged and older demographics who have experienced martial law in the past seem to have heightened anxiety following this latest declaration. Immediately after the announcement, middle-aged customers flocked to convenience stores in the middle of the night to purchase emergency supplies. An industry official said, "With the political chaos continuing, people have no choice but to keep watching the news. They don't have the bandwidth to watch home shopping. It seems this atmosphere will continue for the time being."
Some, however, interpret the shift in attention toward TV news positively. Another industry official mentioned, "While the number of people watching TV had decreased significantly, viewers are now turning on their TVs just to watch the news. The act of turning on the TV could be good news for the home shopping industry. We believe there is a possibility that viewers may transition to home shopping while changing channels after watching the news."
Conversely, the live commerce sector, which targets a younger demographic than TV home shopping, appears to have been largely unaffected in terms of sales. Live commerce show host 'A' stated, "I was nervous because the President's address to the nation was aired during my broadcast time, but sales were not significantly different from usual. So far, the impact from the martial law crisis has not been major."
The industry is concerned that the chaotic atmosphere might become prolonged. Fourth-quarter sales, considered the peak season for the home shopping industry, have the potential to determine this year's overall performance, and a long-term political crisis could have a negative effect. In particular, as warmer-than-average weather continued until early November this year, sales of winter clothing—a major Q4 product—have been sluggish, making December's performance all the more critical; thus, industry officials are monitoring the situation closely.
An industry official said, "It hasn't been long since the situation occurred, so the aftermath cannot be considered very large. However, it is true that there is concern if the situation drags on," adding, "During the impeachment of President Park Geun-hye in 2016, the prolonged uneasy social atmosphere eventually had an impact on sales."
Rising Transmission Fees, Declining TV Viewers… When Will the Home Shopping Recession End?
The recession in the home shopping industry is dragging on. With transmission fees skyrocketing every year and the TV-viewing population shrinking, a decline in performance is continuing. Last year, major home shopping companies saw both revenue and operating profit decline simultaneously.
Hyundai Home Shopping057050 recorded 2.0645 trillion won in revenue in 2023, a 1.7% decrease compared to the previous year, while operating profit stood at 60 billion won, down 45.3% from the year before. Lotte Home Shopping also saw its revenue drop to 941.6 billion won last year, a 12.6% decrease from the previous year (1.0777 trillion won), and operating profit remained at 8.3 billion won, down 89.4% compared to the previous year (78 billion won).
CJ OnStyle also saw its revenue drop to 1.3378 trillion won last year from the previous year (1.3554 trillion won), a 1.3% decrease, and operating profit fell by 4.1% (69.3 billion won) compared to the year before. GS SHOP recorded 1.131 trillion won in revenue and 116.9 billion won in operating profit, figures that are 8.8% and 18% lower than the previous year, respectively.
The home shopping industry aims to achieve a performance rebound by strengthening its 'post-TV' strategies and expanding new business ventures. Moving away from TV channels, which have shrinking viewership and high transmission fee burdens, they are continuing to invest in strengthening mobile broadcasts. They are reinforcing short-form content and launching mobile live commerce broadcasts featuring popular celebrities.
The recent decision by CJ OnStyle to cease broadcasts to some cable operators is also being analyzed as a sign that the home shopping industry's post-TV strategy is gaining speed. As of midnight on the 5th, CJ OnStyle ceased broadcasts to three operators—D'LIVE, Arum Broadcasting, and CCS Chungbuk Broadcasting—with whom it had been in conflict over transmission fees. CJ OnStyle had previously broadcast through 14 cable TV/IPTV companies, but following this incident, the CJ OnStyle channel can now only be viewed through 11 operators.
While home shopping companies have threatened 'blackouts' whenever they faced difficulties in fee negotiations with broadcasters, they had never actually decided to stop transmission. This is because securing TV channels was directly linked to revenue. Consequently, the industry is interpreting CJ OnStyle's decision to stop transmission as evidence that home shopping companies' dependence on TV has diminished.
A CJ OnStyle official stated, "Negotiations with the remaining 11 broadcasters have either been concluded amicably or will be concluded soon. We have not yet seen any noticeable aftermath, such as a drop in sales, due to the transmission halt," adding, "Since about 60% of our current revenue comes from mobile, we are designing a strategy to grow and integrate TV and mobile in a balanced way. To this end, we will focus on strengthening investment in mobile and enhancing app competitiveness next year."