Due to the Prolonged COVID-19 Pandemic... Retail and Distribution Business Sentiment in Gwangju Region at 'Zero Hour'

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] The retail and distribution businesses in the Gwangju area are struggling to recover their business sentiment due to the spread of COVID-19.

The Gwangju Chamber of Commerce and Industry (Chairman Jeong Chang-seon) conducted a survey of 60 such businesses on the ‘2021 4th Quarter Retail·Distribution Business Sentiment Index (RBSI)’ and recorded a score of ‘76’, a 32-point drop from the 3rd quarter (108).

This is analyzed to be due to concerns over industry uncertainty caused by the continued spread of COVID-19 infections, seasonal off-season consumption contraction, and changes in the distribution paradigm centered on online channels.

The Retail and Distribution Business Sentiment Index (RBSI) quantifies the on-site business sentiment of distribution companies; a score above 100 means more companies expect the next quarter’s business to improve compared to the current quarter, while a score below 100 means the opposite.

By management item, sales (107→76), profits (107→75), costs (89→86), and employment (98→91) forecasts all declined compared to the previous quarter.

In particular, sales, profits, and costs are expected to perform poorly compared to the previous quarter due to prolonged infectious disease, seasonal consumption contraction, and increased management costs.

Employment outlook is also expected to worsen due to reduced working hours, staff cuts, and expanded introduction of unmanned automation devices (such as kiosks).

By business type, department stores (125→50) recorded the largest drop of 75 points compared to the previous quarter.

This is interpreted as due to sluggish domestic demand in the seasonal off-season and the impact of the spread of non-face-to-face and online purchases.

Large discount stores (100→63) are expected to see a decline in outlook due to the economic recession caused by COVID-19, intensified competition with corporate-type food material marts, and changes in consumption structure centered on online purchases.

Convenience stores (91→86) showed decreases in sales and profits due to the seasonal off-season and intensified competition both inside and outside the business type, while supermarkets (114→95) are expected to decline in outlook due to domestic demand contraction and intensified industry competition caused by the increase of medium- and large-sized supermarkets, despite increased home meal-related consumption and preference for nearby shopping.

The biggest management difficulty was ‘consumer sentiment contraction (60.0%)’, followed by ‘cost increase (16.7%)’ and ‘product price increase (10.0%)’.

Regarding responses to management difficulties, companies answered in order: ‘strengthening promotions (46.7%)’, ‘strengthening online business (31.7%)’, ‘cost reduction (23.3%)’, ‘store renewal (5.0%)’, ‘launching COVID-related products (3.3%)’, ‘store closure (1.7%)’, and none (1.7%).

In a survey on key management tasks to be promoted, ‘profitability improvement’ was the most selected at 50.0%, followed by ‘strengthening online business (30.0%)’, ‘strengthening logistics and delivery (25.0%)’, and ‘strengthening online-offline linkage (23.3%)’.

Next, in response to the question about areas where their competitiveness needs to be strengthened, ‘product and price competitiveness (58.3%)’, ‘differentiated competitiveness (36.7%)’, and ‘logistics and delivery competitiveness (23.3%)’ were cited.

A Gwangju Chamber of Commerce and Industry official said, “The retail and distribution business sentiment continues to be sluggish amid economic contraction caused by the spread of infectious diseases and intensified competition due to the expansion of the online market, increasing industry uncertainty.” He added, “It is urgent to prepare economic stimulus measures to recover private consumer sentiment and to establish response strategies for companies to secure competitiveness.”

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