The "Curse of Inventory" Means Unsold Excess Inventory Negatively Affecting a Company Financial Health and Operational Efficiency.

The structural crisis of the domestic distribution industry is deepening. Offline distribution channels that showed a brief recovery after the pandemic are once again being crushed by consumption contraction and fixed cost burden, while online platforms grow rapidly and the consumption trend center is shifting. Amid these changes, offline distributors are facing the reality of declining sales and market share loss -- which is leading to the serious problem of the "curse of inventory." According to KCCI Korea Consumer Certification 2023 domestic business closure rate analysis report, Korea self-employed business 5-year closure rate is 66.2% as of 2023 -- significantly higher than OECD average (54.6%); this is interpreted as a signal of structural risk rather than simply an economic downturn problem. The offline retail decline: E-commerce share of total retail exceeded 50% in Korea in 2024 for the first time; department store traffic has declined every year since 2019 except pandemic recovery bounce; hypermarket (large format grocery retail) closures are accelerating as quick commerce (30-minute delivery) captures impulse and top-up shopping; the anchor tenant model (large department stores attracting foot traffic that benefits smaller shops) is breaking down as anchors themselves close or downsize. The inventory curse mechanism: offline retailers overbuy inventory in anticipation of demand that does not materialize; unsold inventory requires markdowns that destroy margins; the markdown pressure forces additional purchasing at lower margins; working capital tied in inventory reduces flexibility to respond to market changes; the cycle of overbuying, markdowns, and cash flow pressure is self-reinforcing and difficult to escape without fundamental business model change. The digital transformation imperative: offline retailers that are surviving are those that have integrated digital channels (seamless online-offline inventory, in-store digital experience, social commerce integration); the curse of inventory is partly a data problem -- better demand forecasting using AI and real-time sales data can reduce overbuying; but the underlying structural shift from offline to online consumption is not reversible by technology alone.