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More karaokes close; pharmacies stay strong

Report reveals uneven impacts of COVID-19 on small business landscape

Inside a karaoke (Yonhap)
Inside a karaoke (Yonhap)

The COVID-19 crisis has dealt a severe blow to small businesses as a whole, but the latest data on business closures reveals some have suffered more than others.

Karaoke lounges, indoor golf ranges and DVD rooms were hit hardest by the pandemic with the biggest increases in closing rates, according to the report by a state-run Korea Development Institute.

The think tank at the request of the government analyzed the second-quarter business closure data to find that closures in the three types of businesses greatly increased from a year earlier. 

(Graph by The Korea Herald based on the statistics from Korea Development Institute)
(Graph by The Korea Herald based on the statistics from Korea Development Institute)

Some 784 of the country’s 44,000 karaoke lounges, screen golf ranges and DVD rooms shuttered their doors between April and June this year. That was over 60 percent up from the level reported in the corresponding three-month period last year when 475 businesses closed.

The closing rate of the three types of businesses came to 1.77 percent, up 0.72 percentage point from the 1.05 percent reported a year earlier.

It was the steepest growth in the closing rate among all businesses covered in the KDI study.

These businesses were especially vulnerable as they were categorized as “risky” by the government’s social distancing measures and were forced to close, the report said.

Karaoke lounges were closed for the longest stretch under the social distancing measures.

The second group of businesses that suffered most from the coronavirus outbreak were karaoke or club-type bars, according to the report.

Among about 42,000 such night entertainment establishments, 614 closed in the second quarter this year -- 204 more than the year before. The closing rate increased by 0.51 percentage point.

The bars were also seen to have been largely affected by the national social distancing measures banning the operation of venues deemed risky, KDI said, in addition to the cautious sentiment of the people choosing to stay at home.

The tourism industry also struggled with the pandemic, as the closing rate for travel businesses was 1.32 percent in the second quarter, up 0.1 percentage point on-year.

On the other hand, some businesses fared better in the wake of the pandemic, with their closing rates going down.

Pharmacies witnessed their rate decline by 1.51 percentage point on-year to 0.82 percent in the second quarter this year.

KDI attributed it to increased demand for nonprescription drugs, as more people shunned hospital visits to avoid the risk of coronavirus infections. Consistent demand for face masks and hand sanitizer also added to sales for pharmacies, the institute viewed.

The performance of businesses dealing with durable goods, such as glasses, also improved, which the KDI explains was affected by the state emergency relief fund provided to people here in May.

According to the report, the closing rate for optical stores decreased by 0.67 percentage point to 0.52 percent in the second quarter this year.

By Jo He-rim (
catch table
Korea Herald daum