Retail Industry Sentiment Significantly Improves... Q2 RBSI at '103'

RBSI for Retail Distribution Industry in Q2 '103'
Clear Rebound in Face-to-Face Consumption Sectors: Large Mart (52p↑), Convenience Store (36p↑), Supermarket (28p↑)

[Asia Economy Reporter Hwang Yoon-joo] The retail distribution industry's business sentiment outlook has significantly improved. Along with seasonal factors, the domestic COVID-19 vaccination that began at the end of February appears to have further raised expectations for the recovery of the retail distribution industry.

The Korea Chamber of Commerce and Industry recently surveyed 1,000 retail distribution companies on the '2021 Q2 Retail Business Survey Index (RBSI)' and announced on the 11th that the index was recorded at '103,' up 19 points from the previous quarter. This is the highest figure since the spread of COVID-19. An RBSI above 100 means that more companies view the retail distribution business outlook for the next quarter positively compared to the previous quarter, while below 100 indicates the opposite.

By business type, large discount stores (95), convenience stores (97), and supermarkets (93) rose by 52 points, 36 points, and 28 points respectively, approaching the baseline (100). Department stores (96) and online/home shopping (114) also continued their optimistic outlook for business recovery from the previous quarter.

Large discount stores (95) surged 52 points compared to the previous quarter, indicating a revival of face-to-face consumer sentiment. Although sales growth temporarily stalled last quarter due to an increase in confirmed COVID-19 cases, the vaccination rollout in Q2 and improving weather are expected to increase customer visits to large discount stores. Various discount events and differentiated promotions prepared to stimulate consumer sentiment also raised expectations for sales growth.

Convenience stores (97) rose 36 points and are predicted to enter a full recovery phase. The off-season winter period has ended, and extended operating hours from 9 PM to 10 PM at multi-use facilities such as restaurants and cafes in the metropolitan area are expected to positively impact sales. The recent reopening of academies and the start of the new school term also contributed positively to the index increase.

Supermarkets (93) increased by 28 points, signaling the start of substantial growth. Particularly, fierce competition with online shopping over fresh food has raised expectations for supermarkets' role as online delivery hubs, which contributed to the rise. In fact, supermarkets have recently partnered with delivery-specialized platforms to strengthen services that quickly deliver fresh food and ready-to-eat meals by using stores scattered across regions as delivery bases.

Department stores (96) showed little significant change. The cautious attitude of the core older customer base toward visiting stores still partly influenced the outlook, but expectations for increased sales in key fashion and luxury items due to revenge spending also played a role.

Online/home shopping (114) greatly exceeded the baseline (100) again this quarter, driven by expectations that online grocery shopping and home economy trends will continue even after the end of COVID-19. In fact, many respondents believed that the share of online shopping would either 'increase compared to now' (55.8%) or remain 'similar to now' (36.6%).

The main competitors of large discount stores and department stores are 'online shopping'... Intensifying online-offline competition

When asked about main competitors, most business types pointed to online shopping. In particular, large discount stores and department stores showed a higher proportion of identifying online shopping as a competitor compared to other sectors. As the retail market competition structure shifts from offline-only competition to an online-offline hybrid, strengthening online presence and linking online and offline channels have become essential survival strategies for these sectors.

Regarding management capabilities to be strengthened in the future, respondents cited 'differentiation' (34.1%), 'product and price' (28.2%), 'location' (22.2%), and 'platform' (17.5%) in that order. By business type, large discount stores (36.6%) and online/home shopping (54.1%) most frequently selected platform competitiveness, while department stores and supermarkets more often pointed to digital competitiveness (61.8%) and product and price competitiveness (40.8%).

As for government support measures, 'abolition or relaxation of distribution regulations' (37.3%) was most frequently mentioned, indicating that distribution regulations still pose management difficulties for distribution companies. This was followed by 'financial and tax support to overcome COVID-19' (27.3%) and 'additional disaster relief funds to stimulate consumption' (25.2%).

Seo Deok-ho, Director of the Korea Chamber of Commerce and Industry's Distribution and Logistics Promotion Institute, stated, "As vaccination spreads worldwide, consumer sentiment recovery is gaining momentum," emphasizing, "Only companies that differentiate their business models and innovate products and services to meet changed consumer expectations will survive in the transformed market environment."

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