Gwangju Region Retail and Distribution Industry Outlook 'Weak' for 5 Consecutive Quarters

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] The economic outlook for retail and distribution companies in the Gwangju area has failed to improve for five consecutive quarters.

The Gwangju Chamber of Commerce and Industry (Chairman Jeong Chang-seon) conducted a survey on the '2020 4th Quarter Retail and Distribution Business Sentiment Index (RBSI)' targeting 65 retail and distribution companies in the Gwangju area, and the results showed a 'poor' outlook, similar to the previous quarter (78).

This is analyzed to be due to concerns over sluggish domestic demand caused by the spread of COVID-19 in the region, along with consumption contraction due to the seasonal off-season.

According to the analysis by management items, the sales outlook (82→79) fell by 3 points compared to the previous quarter, and the profit outlook (82→85) increased by 3 points compared to the previous quarter but still remained below the baseline (100). The cost outlook (83→86) is expected to continue to be negative, as sales and profits are sluggish due to the spread of COVID-19, resulting in burdens related to management and marketing expenses, similar to the previous quarter.

The employment outlook (102→88) responded that employment conditions would worsen due to sales decline and ongoing economic uncertainty caused by the spread of COVID-19, leading to restructuring.

By business type, large marts (82→55) are expected to remain sluggish due to strengthened distribution regulations and trends toward non-face-to-face and online purchases. Convenience stores (94→75) and supermarkets (67→61) are also expected to continue poor business conditions due to the spread of COVID-19 in the region and consumption sentiment contraction during the seasonal off-season.

Department stores (75→125) are the only sector expected to improve, anticipating a recovery in consumer sentiment due to high-priced gift set sales during non-face-to-face holidays and increased purchases of winter clothing at year-end.

Local retail and distribution companies expect the distribution industry slump caused by COVID-19 to continue 'until the development of COVID-19 treatments and vaccines (64.6%, 42 companies),' and only 1.5% (1 company) expect recovery within this year.

As the COVID-19 situation is expected to prolong, the most common response among local retail and distribution companies was to cope through 'cost reduction such as labor and operating expenses (41.5%, 27 companies),' followed by 33.8% (22 companies) who answered 'no countermeasures.'

Additionally, companies responded that they are coping through 'diversification of product assortment (4.6%, 3 companies),' 'activation of online sales (4.6%, 3 companies),' 'change of business type or products sold (4.6%, 3 companies),' 'withdrawal of business locations (4.6%, 3 companies),' 'facility investment and acquisition of other stores (3.1%, 2 companies),' 'securing liquidity through external borrowing (3.1%, 2 companies),' and 'expansion of fresh food (1.5%, 1 company).'

The most needed government support measures to overcome the distribution industry slump were demands for 'tax reductions (32.3%, 21 companies)' and 'emergency business stabilization funds (32.3%, 21 companies),' followed by 'employment stabilization funds (24.6%, 16 companies),' 'distribution of second disaster relief funds (23.1%, 15 companies),' 'regulatory relaxation (20.0%, 13 companies),' and 'postponement of loan and government subsidy repayments (7.7%, 5 companies).'

A representative of the Gwangju Chamber of Commerce and Industry said, "As the economic contraction caused by COVID-19 is expected to continue for a long time, the retail and distribution industry's perceived business conditions have not recovered," adding, "Government support such as tax reductions and financial aid is urgently needed to respond to COVID-19 and overcome the distribution industry slump."

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