Social Distancing Causes 1st Quarter Retail Market to 'Stumble'... More Negative Outlooks

KCCI, Retail Distribution Industry Business Outlook Index 96

Retail Distribution Industry Business Outlook Index and Major Business Type Status

[Asia Economy Reporter Choi Dae-yeol] The Retail Business Survey Index (RBSI) for the first quarter of this year in the retail industry was recorded at 96, falling below the baseline (100) for two consecutive quarters. A figure below the baseline means that more companies view the outlook negatively than positively.

According to the results of the 1st quarter retail business outlook index announced by the Korea Chamber of Commerce and Industry on the 9th, the RBSI for the first quarter of this year was slightly lower than the 4th quarter (99). In the 2nd and 3rd quarters of last year, the index exceeded 100, indicating more optimistic views on the economy, but from the 4th quarter, more companies have become pessimistic.

By business type, online shopping scored 107, surpassing the baseline for six consecutive quarters since the 4th quarter of 2020. This reflects expectations that non-face-to-face consumption will continue due to the resurgence of COVID-19. The expansion of various business models such as online grocery shopping, live commerce, and subscription services, along with acquisitions or strategic partnerships between large offline retailers and online companies, also contributed to the positive outlook. However, the figure was slightly down from the previous quarter (110).

Among face-to-face channels, department stores recorded 102, the only sector to exceed the baseline. This was also an increase from the 4th quarter of last year (98). The Korea Chamber of Commerce and Industry explained that this reflects expectations that revenge consumption driven by increased demand for luxury goods and furniture will continue. The effect of large store openings last year is also expected to be enjoyed.

Large discount stores (88), convenience stores (85), and supermarkets (82) all fell below the baseline. This is interpreted as being influenced by the application of the quarantine pass (vaccination certificate/negative test confirmation) due to strengthened social distancing, a decrease in foot traffic, and intensified competition with online channels. Seo Deok-ho, Director of the Distribution and Logistics Promotion Institute at the Korea Chamber of Commerce and Industry, said, "The trend of online and non-face-to-face consumption is no longer limited to specific generations and product categories due to the prolonged COVID-19 situation," adding, "Only fundamental structural improvement and innovation through digital transformation, rather than ad hoc responses, can guarantee sustainable growth."

This survey was conducted last month targeting 1,000 retail companies in seven major cities nationwide. As a strategy for changes in the distribution environment, many respondents said they would strengthen online business or enhance online-offline linkage. The biggest management difficulty cited was the contraction of consumer sentiment, followed by rising costs, inflation, and intensified competition.

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