Gwangju Region Retail Industry Outlook for Q2: 'Recession' Expected

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] The Gwangju Chamber of Commerce and Industry (Chairman Jeong Chang-seon) announced on the 10th that the '2020 Q2 Retail Business Survey Index (RBSI)' conducted on 66 retail and distribution companies in the Gwangju area recorded '54,' down 20 points from the previous quarter (74).

The Retail Business Survey Index (RBSI) quantifies the on-site business sentiment of distribution companies. An index above 100 indicates that more companies expect the next quarter's business to improve compared to the current quarter, while below 100 indicates the opposite.

In this survey, although Q2 is seasonally the start of the peak season, the implementation of social distancing campaigns due to the spread of COVID-19 and the expansion of non-face-to-face shopping trends led to a decrease in store visits, deepening concerns about the recession of local retail distribution companies.

By business type, large discount stores (82→36), department stores (75→25), and convenience stores (82→38) all forecasted a 'worsening' business condition compared to Q1, while supermarkets (63→95) also remained below the baseline (100), expecting continued sluggish business.

Large discount stores (36), convenience stores (38), and department stores (25) all saw a significant decline in outlook compared to the previous quarter due to reduced customer visits caused by the spread of COVID-19 and changes in consumption patterns (increase in online purchases). Department stores (25) showed the largest drop (50 points) from the previous quarter, marking the lowest outlook among business types.

Supermarkets (95), despite a preference for nearby shopping due to the spread of COVID-19, still fell below the baseline (100) due to ongoing overall consumption contraction.

Analysis by management items showed that sales outlook decreased by 17 points from the previous quarter, indicating expectations of worsening sales. This was attributed to the recession combined with weakened consumer sentiment and reduced customer visits caused by COVID-19.

By business type, large discount stores and department stores saw sales outlooks drop by more than 50 points compared to the previous quarter, and convenience stores also declined by 26 points from Q1, indicating a deterioration in sales outlook for major business types.

Although supermarkets showed an improved sales outlook compared to the previous quarter, they still remained below the baseline (100) due to the impact of consumption contraction.

The cost outlook also decreased by 17 points from the previous quarter, which was analyzed as being caused by the ongoing poor sales situation due to COVID-19, coupled with increased management costs such as labor and quarantine expenses.

By business type, department stores showed the lowest outlook with a 75-point decrease from the previous quarter, while large discount stores and convenience stores were expected to decrease by 9 points and 33 points respectively. In contrast, supermarkets were the only business type to exceed the baseline (100), expecting to reduce management costs through measures such as adjusting working hours.

The biggest difficulty in business activities was cited as 'weakened consumer sentiment (63.6%)', followed by 'rising costs (labor, financial, logistics, etc.) (21.2%)', 'intensified competition between/within business types (13.6%)', and 'government regulations (1.5%)'.

Regarding tasks the government should undertake to enhance competitiveness in the distribution industry, 'regulatory relaxation (45.5%)' accounted for the largest share, followed by 'early resolution of the COVID-19 situation (15.2%)', 'policy support at the level of manufacturing industry (15.2%)', 'urgent wage adjustment (7.6%)', 'support for new technology development and commercialization (6.1%)', 'reduction of card fees (3.0%)', and 'economic revitalization (3.0%)'.

A representative of the Gwangju Chamber of Commerce and Industry said, "Amid ongoing domestic and international economic recession, the overlapping effects of weakened consumer sentiment and rising costs due to the COVID-19 situation are worsening the business sentiment of local retail distribution companies. Institutional support including regulatory relaxation is necessary for retail distribution companies struggling with economic recovery, and prompt resolution of the COVID-19 situation to improve business conditions is also urgently needed."

This content was produced with the assistance of AI translation services.