A tap water bill and other utility bills are jammed into a slit in a door belonging to a business that shut down in Seoul's Myeong-dong area, Sept. 22. Yonhap

Sole proprietors in Korea are closing their businesses at a record rate as the ongoing recession is driving consumers to spend less and go to businesses that offer cheaper alternatives, market observers said Thursday.

The trend is evident in the piles of furniture and kitchen equipment discarded by closed businesses, along with a decline in card payments across Korea's major commercial districts.

Data shows that Korea is facing its worst consumer market in a decade, even more challenging than the period from 2020 to 2022, when the COVID-19 pandemic impacted the economy.

During the second quarter, over 15,800 businesses shut down in Seoul alone, about 20 percent higher than the average during the pandemic period.

According to the National Tax Service, over 986,000 businesses closed last year, the highest figure ever recorded in the country's statistics. Compared to the previous year, this was a 13.7 percent jump — also the largest jump ever recorded.

Restaurants were particularly notable in the data. Out of 790,000 registered restaurants in the country, 153,000 closed their doors last year, nearly matching the 159,000 that opened during the same period.

According to Rep. Park Sung-hoon of the ruling People Power Party, out of 11.46 million private business operators who filed tax returns in 2022, 75 percent reported that they earned less than 1 million won ($755) per month on average.

Statistics Korea said the number of sole proprietors in July was 5.72 million, down by 62,000 from the previous year and a reduction in six consecutive months.

A market in Seoul is seen vacant as tenants who used to sell seafood have shut down businesses, Aug. 19. Yonhap

The overall card payment records in Seoul's key commercial sectors show that more consumers are spending less than before. According to market tracker Nicezinidata, 15 out of the city's 30 biggest commercial markets have seen a year-on-year decrease in card payments.

The neighborhood of Hongik University saw a 51 billion won decline, while the Sinsa area saw a drop of 40.2 billion won, the Sillim area recorded a decrease of 37.8 billion won, and the Gangnam area of 24.5 billion won.

These figures stand in stark contrast to the previous year, when 29 out of the 30 hotspots experienced year-on-year increases.

An area in Seoul's Jung District, Hwanghak-dong, known for its secondhand furniture and kitchen supply sellers, is also witnessing the signs of recession.

Many of the secondhand furniture sellers in the area stopped bringing in new items as they are seeing a decrease in sales. Some said their sales have dropped to one-third of their sales during the COVID-19 pandemic.

"We've been selling used furniture since 1987, but I've never seen a worse year," one of the sellers said. "More than 10 sellers have closed for good. We're also shutting ours down this month."

Amid the recession, retail chains and franchise companies known for affordable prices have seen soaring sales.

Daiso, a dollar-store chain, last year saw 3.41 trillion won in sales and achieved an operating profit of 261.7 billion won. The company has never seen its sales over 3 trillion won before.

Japanese-style pub, or "izakaya," franchises that offer drinks at an affordable price, with some offering a pint of beer for only 1,900 won, have become popular as well. Some of these franchises established less than a year ago have already seen the number of their franchisees reach 160 in numbers in six months or 170 in nine months.