B2C firms in South Korea should expect an increase in demand for in-person consumption, as consumers will now be able to access out-of-home entertainment and local services. Firms should also expect increased demand in channels that qualify for discount coupons and vouchers under the stimulus package passed in July, as redemption of these vouchers will resume in November. However, over the course of 2021, Korean consumers have been selective with in-person consumption, tending to defer to online channels when available. We expect some of this reticence to persist during the initial reopening and during periods of high caseloads. As a result, demand planning will continue to be challenging in the coming months, as consumers will take time to adjust to the new normal and settle into new consumption patterns. Furthermore, firms should plan for the implementation of temporary restrictions in case of a spike in COVID-19 cases.
Overview
South Korea’s transition to “living with COVID-19” comes as about 70% of the Korean population has been fully vaccinated. The aim of the strategy is to treat COVID-19 as endemic and on par with other respiratory diseases, such as the seasonal flu. Under this approach, restrictions will be relaxed in a multi-stage process, with greater freedoms afforded to individuals that have been fully vaccinated. Home recovery will become the norm for asymptomatic cases and for individuals under age 70. The new strategy will also see a shift in government focus from tracking cases to tracking severe illnesses, hospitalizations, and deaths. However, to limit the spread of COVID-19, mask mandates will continue to be enforced, and a vaccine passport system will be imposed for access to public spaces and multi-use facilities.
Our View
South Korea has developed a multi-faceted reopening strategy that will gradually ease restrictions over the next three months, displaying a cautious and measured approach to reopening. However, the pivot to “living with COVID-19” comes at a time when the country is still recording high caseloads, raising the possibility of a spike in cases as restrictions ease. We expect the transition to “living with COVID-19” to be rocky; the current timelines outlined by Seoul will likely be marked by substantial delays, and temporary restrictions may be reimposed if daily cases surpass 5,000.
At FrontierView, our mission is to help our clients grow and win in their most important markets. We provide the research, data, and insights you need to outperform the competition. Subscribe to our weekly newsletter The Lens published by our Global Economics and Scenarios team which highlights high-impact developments and trends for business professionals. For full access to our offerings, start your free trial today and download our complimentary mobile app, available on iOS and Android.