[Weekly Kyunghyang] Hongik University Station in Mapo-gu, Seoul. Music was pouring out of rows of unmanned ‘gacha’ (capsule-toy vending) shops lining the alley. At one of them, dozens of claw machines were arranged in three tiers, densely filling the wall, and a group of students were cheering as they focused on the game. The collection box for recyclable product containers was overflowing, suggesting that a considerable number of customers had come and gone. No on-site staff were visible. Instead, next to the change machine there was only a contact number together with a message that read ‘CCTV is operating’.

A merchant identified as Mr. A, who runs an accessory specialty shop in the Hongdae fashion alley, said, “During COVID-19 the commercial district was completely wrecked and vacancies were everywhere, and it has only just recovered,” adding, “Even so, people do not rush out to buy things like before, and there is more of a mood to play without spending much, like claw machines or coin karaoke rooms.” He especially noted, “People buy goods online rather than coming out to buy them,” and “So the new arrivals are either food-and-drink places or unmanned shops.”

In 2026, when high inflation and low growth have taken hold, retail districts in South Korea are changing. As self-employed business owners unable to bear high rents and labor costs withdraw, unmanned shops such as claw machines, gacha shops, and coin karaoke rooms are rapidly taking their place. Some view this reshuffling as a flash-in-the-pan fad in leisure culture led by the MZ generation, but others see it as a facet of a ‘retail apocalypse’ (the end of the offline retail market) born of the collapse of self-employment and recession-type consumption.

In Yeonnam-dong, Mapo-gu, Seoul, claw machines and gacha shops stood out even more. At several large stores that also ran props shops, staff could be seen working, but most small stores were unmanned. Prices for claw machines ranged from 1,000~2,000 won, and for gacha from 2,000~6,000 won, varying widely by machine; the pricier the prizes, the higher the play price.

Kim Hyun-sung (35) said, “I did not go to claw-machine shops often, but I sometimes go to (capsule) gacha shops because figures (models) from the (manga) <One Piece> that I like keep coming out,” adding, “Compared with money spent on things like travel or golf, it is not a big sum, so I do not really think of it as wasteful.” College student B also said, “Since it does not cost much, it is good for a light one or two plays,” and “If the same item comes out of a draw, I can swap with friends, so we sometimes come together.”

The explanation is that it is easy to experience pleasure at relatively low cost compared with other entertainment, and Lee Joon-young, a professor at Sangmyung University (Department of Economics and Finance), interpreted it as a form of ‘dopamine consumption’ in which people repeatedly seek small luxuries and immediate rewards the more insecure everyday life becomes. Professor Lee explained, “When money is tight, consumers pay more attention to cost-effectiveness, and in the recent gacha boom, it is similar in that, rather than expecting something grand, people look for instant rewards from small income and small luxuries, as with expressions like ‘tangjin-jaem’ (the fun of spending a small amount down to the last bit) or ‘aboha’ (a very ordinary day).”

Gacha originated from the Japanese onomatopoeia ‘gacha-gacha’, meaning ‘clack-clack’. It imitates the sound of a product dropping after inserting coins and turning the lever to draw a capsule. In Japan, often called a gacha heaven, during the severe low-growth period known as the ‘lost 30 years’, as people curtailed consumption, gacha spread as a way to gain instant satisfaction with small amounts of money. For this reason, the gacha industry was long regarded as a representative recession-era business.

Professor Lee said, “One cannot say definitively that the current drawing craze among young people is recession-type consumption. As interest in Japanese culture, including anime such as <Demon Slayer>, has grown, gacha culture has also spread in tandem.” He added, “The more difficult reality becomes, the more people tend to seek immediate, thrilling fun to distract from those hardships. It clearly relates to consumption phenomena that reflect an economically tough reality.”

In fact, the wallets of young people at the center of the ‘gacha’ spending trend are getting tighter. According to the Ministry of Data and Statistics, in January the number of employed youth (ages 1529) fell by 175,000 from a year earlier. The employment rate was 43.6%, down 1.2 percentage points from the same month a year earlier, the lowest level in five years since January 2021 (41.1%) during COVID-19. In particular, as large corporations narrow entry-level recruitment, the youth employment rate has failed to escape a three-year downturn, while living costs such as housing have surged, further shrinking disposable capacity.

C, who works at a department store in Seoul, said, “The media often tends to view the MZ generation negatively, but looking around me, everyone works hard and many friends do side gigs like delivery. It is because there is nothing meaningful one can do by saving a salary.” C added, “After paying monthly rent and installments, there is hardly any money left to spend,” and “Stories about earning tens of millions of won through stocks are only possible for people who invest with borrowed money (debt-funded investment).”

As of 2024, households without homes in their 20s and 30s in Seoul and the greater metropolitan area number 2,045,634 (Seoul 992,856), the highest since data compilation began in 2015, and this is the very generation taking a direct hit from record-high increases in monthly rent.

On the other side of the unmanned-store boom lies the rapid collapse of self-employment and commercial districts in the form of closures and vacancies. Even in Naseong-dong, known as Sejong City’s representative food-and-drink street, claw-machine and capsule-toy shops have recently been opening in succession. Unmanned shops have taken over spots once occupied by restaurants and bars, and prime first-floor corner units have recently switched to claw-machine businesses.

In neighborhood retail areas a bit removed from central districts, unmanned outlets without employees1,000-won bakeries, clothing shops, table-tennis halls, and flower shopshave long since taken over.

A licensed real estate agent at a nearby agency said, “When the economy is weak, business types that do not require maintenance costs arise first in a retail area,” adding, “Fixed costs like inventory management and labor are unsustainable, so unmanned shops without such burdens look relatively easy to run.” The agent continued, “Unmanned claw-machine shops or photo booths go on the first floor, and from the second floor up you get unmanned stores like coin karaoke rooms, clothing shops, and flower shops,” and “In areas where rentals move well, that does not happen, but where vacancies have been long-standing, some even come in on ‘kkalse’ terms.”

‘Kkalse’ refers to a short-term lease in which the tenant starts by prepaying several months of rent without a security deposit. Because there is no deposit, initial investment is smaller, so tenants with limited capital tend to prefer it even with relatively high monthly rent. Building owners are not inclined to prefer it, however, because the term is short and the space can quickly become vacant again. Many tenants first bring in machines and start operating on kkalse terms, then, once profitability is confirmed, move to a formal lease contract.

The reason this kkalse trend for unmanned stores is spreading even in major commercial districts is that, after a long slump, the number of self-employed owners closing down is rising rapidly. Data from the National Tax Service statistics portal show that the most recent figure, ‘2024 self-employed closures’, was 1,008,282, exceeding one million for the first time. Closures among the self-employed rose from 867,292 in 2022 to 986,487 in 2023 and continue to increase. Among those who closed, half (50.2%) cited poor business as the reason, the highest level in 14 years since 2010 (50.23%) when closures surged in the wake of the global financial crisis.

In particular, restaurants and real estate leasing, both bellwethers of domestic demand, are clearly declining. As of January this year, operating restaurant businesses numbered 801,887, down 1.9% from the previous month, marking 21 consecutive months of decline since May 2024. Real estate leasing has also been falling continuously since November 2023.

Meanwhile, unmanned stores with no employees at all are estimated to have already surpassed 10,000 nationwide. Because collection methods vary by industry, there is not yet an official government statistic that encompasses the many types of unmanned stores. However, according to an internal survey of unmanned stores by the National Fire Agency released by the Ministry of the Interior and Safety, unmanned stores in the top ten local governments numbered 9,030 as of the end of 2024, already nearing 10,000. By category, ice cream (22%), laundries (22%), and study cafes (11%) made up a majority, but photo booths (8%), coin karaoke rooms (7%), and game-service businesses (5%) show that unmanned stores are expanding rapidly across diverse fields. According to Seoul City’s district-by-district registration status for youth game-service establishments (arcades and game centers), as of March this year the total number in Seoul was 2,430, an increase of 465 over five years. Given how the traditional arcade industry centered on arcade games has rapidly shrunk due to the boom in PC and console games, the industry expects that, in addition to new openings, a considerable number of existing arcades have been absorbed into unmanned claw-machine shops.

Lee Hong-Ju, a professor at Sookmyung Women’s University (Department of Consumer Economics), analyzed, “In a recession, consumption does not disappear, but tends to shift from big spending to small experiences. Department stores still do well, but big-box supermarkets see sales fall, while ultra value-for-money chains like Daiso are crowdedthis is representative K-shaped consumption,” adding, “The recent rush of unmanned stores into core commercial districts can be interpreted as a phenomenon where this meets the collapse of retail areas unable to find tenants.”

Lee added, “In a situation where fixed-cost burdens hollow out commercial districts and make it hard to find tenants, low-cost start-up models that can operate unmanned draw attention, and the item of cost-effective spending and the ‘lucky draw’ (prize draw) that sells well in a downturn fit perfectly,” and “Rather than a simple fad, it should be seen as a portrait of an era in which depressed retail zones and an uncertain economic outlook intersect in complex ways.”